The rise of Dogecoin (CCC:DOGE-USD) was fast and thrilling. A Shiba Inu-themed cryptocurrency that was the brainchild of two software program engineers has taken the investing world by storm. After years of being overshadowed by extra standard cash like Bitcoin (CCC:BTC-USD), Ethereum (CCC:ETH-USD) and Litecoin (CCC:LTC-USD), Dogecoin bought its flip within the highlight after Tesla’s (NASDAQ:TSLA) billionaire boss tweeted “Who let the Doge out.”
On Jan. 29 the forex was up 800%, changing into the “crypto (GameStop (NYSE:GME) gme” according to one Reddit user. A seemingly unknown coin now has the web abuzz. If there’s one lesson we will be taught from this, it’s that memes and tweets have the ability to maneuver markets.
Dogecoin Is Proof That Memes Can Transfer Markets
Though many might have heard about Dogecoin for the primary time within the final couple of weeks, the cryptocurrency has truly been round since 2013. The coin was the product of a joke by two software program engineers who needed to pay homage to Bitcoin’s then-questionable status. A coin that meant to garner nothing various laughs has now develop into the face of the cryptocurrency trade. Its declare to fame is the results of a collection of tweets and memes.
For causes that also stay unclear, Dogecoin caught the eye of billionaire Elon Musk. Tesla’s tenacious CEO took to Twitter (NYSE:TWTR) to tweet about the coin, writing “no highs, no lows, solely Doge” together with a Lion King meme with the Shiba Inu canine on Simba’s face.
Not lengthy after this, Dogecoin’s worth skyrocketed, surging greater than 800% in 24 hours. Different billionaires and popular culture icons like Gene Simmons and Snoop Dogg bought in on the motion, tweeting in regards to the forex as effectively.
Dogecoin is proof of the unconventional shift in market energy with folks collaborating within the rally for a way of neighborhood. Though the coin has no intrinsic worth like shares or bonds, buyers are rallying collectively to get its value to $1. The Dogecoin phenomenon is a case research in how tradition and expertise have the flexibility to actually transfer markets. Simply as we noticed in GameStop inventory’s meteoric rally final month.
So Ought to You Make investments?
Dogecoin has dipped 20% since its Feb. 7 excessive of 0.087159. Nonetheless, the forex remains to be up 1,350% this 12 months with a market worth of $8 billion. Whereas many have expressed enthusiasm in regards to the forex, others stay cautious.
An article by MarketWatch explains that not like conventional Bitcoin which is restricted in provide, Dogecoin has no built-in limit. Which means that it may be mined for a whole lot or 1000’s at any given time. In the end, the forex worth is the results of a mass-market motion that continues to be untethered.
So the forex, because it stands, is basically speculative. Billy Markus, the founding father of Dogecoin, recently stated the rally is “not one thing (he) can comprehend.” He likened the rally to that of shares like GameStop and AMC (NYSE:AMC) — each of which have cooled down significantly from their highs. Many researchers have additionally urged buyers to train higher warning relating to cryptocurrencies like Dogecoin.
The rise within the forex’s worth can function an actual temptation to buyers however its long-term progress stays unsustainable. On one hand, the forex is a good funding various in an surroundings the place rates of interest are near zero. However on the flip facet, there’s lots we nonetheless don’t find out about cryptocurrencies. Not like conventional investments, Bitcoin is disproportionately managed with 95% of the currency controlled by simply 2% of the market.
The Backside Line
The current rally in Dogecoin is a testomony to the ability of memes. Whereas the value spikes are undoubtedly enticing, it’s additionally value noting that cryptocurrencies are extremely risky. In line with Garrick Hileman of blockchain.com, Dogecoin might lose 90% of its value.
With this being an actual chance (as we noticed with GME and AMC inventory), I wouldn’t go all-in on Dogecoin. Nevertheless, if you wish to be part of the mass market motion, Dogecoin does commerce on a budget and is value a small funding. Even when issues don’t go your approach, it might function a great learning opportunity.
On the date of publication, Divya Premkumar didn’t have (both straight or not directly) any positions in any of the securities talked about on this article.
Divya Premkumar has a finance diploma from the College of Houston, Texas. She is a monetary author and analyst who has written tales on varied monetary matters from investing to private finance. Divya has been writing for InvestorPlace since 2020.