Dogecoin, a cryptocurrency branded after the viral dog meme a few years ago, has risen about 25,000% in six months to a market capitalization of about $ 86 billion.
According to CoinMarketCap, S & P increased 19% over the same period, while crypto rivals Bitcoin and Ether increased 286% and 698%, respectively.And the loved one in the stock market Tesla?? It has increased by 56% since November.
“This joke is on Wall Street,” said Matty Greenspan, portfolio manager and founder of Quantum Economics. “You have a situation where TikTok teens outperform even the smartest suits by thousands of percentage points.”
In 2013, software engineers Billy Markus and Jackson Palmer launched satirical cryptocurrencies as a way to make fun of Bitcoin and many other cryptocurrencies with grand plans to take over the world.
They called it Dogecoin, pronounced “Dogecoin” and with a soft “g” sound, after the once popular “dog” Shiba Inu meme. Its purpose?become A faster and “fun” alternative to Bitcoin..
“The appeal of Dogecoin has always been its honesty,” explained Galaxy researchers Alex Thorne and Karim Helmy. Notes to clients May 4th. “Unlike many other crypto projects … there is no grand vision and no announcement of how Dogecoin will change the world.”
In addition, the Bitcoin supply has a limit of 21 million coins, but there is currently no limit to the number of Dogecoins you can create.
“One of Bitcoin’s value propositions is the rarity of digital. There will only be 21 million people,” Greenspan said. “There is no such hard cap [with dogecoin], And it has a really crazy inflation schedule. “
It is not entirely clear when and why Dogecoin captured the heart of Elon Musk.
Billionaire Tesla and SpaceX CEO I’ve spent many years Speak tokens.
“You have someone like a cult leader,” said Ripple’s general manager, Ashishvilla, who manages the alternative cryptocurrencies used for payments.
But masks aren’t the only celebrity supporters of animal brand tokens. Mark Cuban, owner of the Dallas Mavericks, Snoop Dogg and Kiss Bassist Gene Simmons, all gathered publicly behind Dogecoin.Beef jerky brand Contains a slim gym About the action.
But the record price of Dogecoin isn’t just about celebrity support.
Market conditions are also going well. Multiple rounds of stimulus checks meant that people had more money on hand to spend. Apps like Robin Hood have made it easier than ever for casual investors to bet on stocks, turning day trading into a pandemic pastime.
There is also a lasting feeling of “sticking” to the facility.
“Dogecoin is like this kind of big FU for the system,” said Avi Felman, Head of Trading at Block Tower Capital. “It’s like,’Yes, this could also be worth it, and I’m going to buy it, so I’m going to buy it.'”
Experts say the dynamics are reminiscent of GameStop Enthusiastic trading since the beginning of this year.
“Eron is basically pushing this message,’Why is Dogecoin worthless?'” Ferman said. “This is part of the GameStop boom. People like these stories. They like these stories. They like these jokes. And Dogecoin brings the heart and imagination of every retail investor. I caught it. “
With the rise of fee-free trading through online brokerage apps like Robin Hood, buying cryptocurrencies has never been easier.
“You have an enthusiastic online community,” Birla said of the Doge Evangelist fan base. “You have Twitter and Reddit, where they all come together and think about how to pump Dogecoin.”
The question of whether Dogecoin has value is controversial.
At this time, there are few use cases for tokens.But More merchants I’m starting Accept dogecoin As a payment method, it is far from the hiring level that needs to be used as an alternative to the actual currency.
“Recently, it’s all one big marketing strategy,” said Mike Bucella, general partner of Block Tower Capital.
Unlike rival cryptocurrencies such as Ethereum, where programmers can build applications on the platform to lend and borrow money, there is little you can do with Dogecoin.
Dogecoin Not a really reliable wealth store Either, given that this usually requires some long-term trust in the coin and the blockchain on which it is built.
“Looking at the Dogecoin protocol itself, we don’t even know if anyone has added new features or code in the last few years,” Birla said. “Dogecoin doesn’t really have a development team behind it.”
Given these limitations, the Dogecoin run-up looks purely speculative. Dogecoin is worth it because others believe it is worth it. And because they believe someone else willing to buy it at a higher price.
“We believe that rising Dogecoin prices are a factor in network illiquidity and extreme growth,” explains Greenspan. “I don’t think this kind of growth is sustainable once the network reaches a critical mass.”
But not everything will be lost for the future of Dogecoin.
“The real value lies in today’s memetic-led culture, and the doge represents the meme’s network value, which may prove to be enormous,” Busera explained. “At some point, if the Doge community decides to implement a combustion or new supply mechanism via a protocol hard fork, this value is likely to be retained in the long run.”
Disclosure: “Saturday Night Live” is a television show on CNBC’s parent company, NBC Universal. CNBC owns the exclusive off-network cable rights to “Shark Tank” with Mark Cuban as a panelist.
What is Dogecoin?
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