Dogecoin just made it to the top four most prominent crypto coins after a market cap of $63 billion. The coin is among the most hyped cryptocurrencies in 2021, and the DOGE wave is evident all over social media.
Retail investors are rushing to grab a piece, but if making some quick bucks is what’s driving you, I bet you might want to slow down, especially after learning that Dogecoin was created as a joke by a software engineer, Billy Marcus, in just 3 hours. Even though Doge began as a joke and even commonly referred to as a meme-coin, it’s still a cryptocurrency.
Bitwave CEO feels that the coin came to poke fun at Bitcoin but is now taking a different turn in 2021. Gaining over 5000% in just a few months is no joke but let’s look into the finer details. Here are some analogies that show Doge may not be an excellent long-term investment.
Dogecoin’s price has only started to soar to heights starting early 2021. According to statistics, the coin’s growth rate seems to exceed that of Bitcoin. However, a closer look at Doge’s performance reveals a sharp difference in the price history. Bitcoin was the first cryptocurrency launched in 2009 by the mystery man Satoshi Nakamoto.
The idea of blockchain technology and digital currency was quite green. Many people did not understand cryptocurrencies, and Bitcoin even suffered rejection and bans due to the decentralization and volatility associated with the crypto world.
Despite these conditions, Bitcoin has seen remarkable development and still rules the crypto world. The coin was worth over $1,000 by 2013, the same year Billy Markus and Jackson Palmer created Dogecoin. On the contrary, Dogecoin is yet to hit $1 eight years down the line.
Ethereum launched about two years after Dogecoin, and its growth has been monumental. Even though its growth can be associated with its Ethereum blockchain that hosts many other projects, its value is far above Dogecoin.
Both coins are among the top five largest cryptocurrencies, but Ethereum has surpassed the $4,000 mark and makes Dogecoin still appear a joke. The internet may be excited about the coin right now, but at its pace, it’s not a long-term investment option.
DOGE Could Simply Be A Joke
Dogecoin founders were just two guys who became friends following their mutual interest in cryptocurrencies. They were envious of Bitcoin and thought the crypto industry was growing quite serious. They resolved to create their crypto but make it more fun and friendly. From its launch in late December 2013, it has all along been a fun and friendly altcoin. It has been used to reward social platform users like the Reddit community for good content and charity programs.
However, it is worth noting that the Dogecoin team did not make any updates or developments since 2015. What’s more is the fact that the coin’s co-founder, Markus, sold his entire Dogecoin position to acquire a motor vehicle, a used Honda Civic.
DOGE Market Manipulation
The current Dogecoin rally follows Elon Musk’s social media posts about the meme-coin. It could just be an impact of what people believe following Musk’s sentiments about the coin. The coin’s price tumbled after Musk made fun of the crypto on SNL, terming Dogecoin a ‘hustle.’ The coin was trading between 60 and 70 cents but went down 40% after the show. Cryptocurrencies are known to be notoriously volatile, but it’s evident Elon Musk’s sentiments could be moving Dogecoin’s market.
It all started in January 2021 when the Tesla CEO began to tweet about the coin. Musk became a high-profile Dogecoin supporter, and this helped drive up the coin’s price. The SpaceX CEO plans to use DOGE for his space exploration projects in 2022, and the company is already accepting DOGE as a payment option. Musk noted that his space satellite project would take DOGE to the moon in one of his tweets.
Dogecoin enthusiasts had been waiting for Musk’s positive sentiments on his SNL appearance and a subsequent surge in DOGE prices. However, their expectations did not materialize, and DOGE went crushing. It’s hard to conclude Elon Musk carries a significant influence on the DOGE market given the known volatility of the crypto market, but it is a factor not worth ignoring.
Blockchain technology presented itself as the cutting-edge technology that would guarantee the security of a revolutionary financial system with its distributed ledger network. However, the industry has still faced its share of security problems, and DOGE has been no exception.
In 2014, Dogewallet was hacked, and about 21 million Dogecoins were lost. The hack awkwardly happened on Christmas day, but the holders were lucky to receive a refund from the Doge community. A Dogecoin exchange called Moolah, created in 2017, also went bankrupt at some point, although it had been a fraudulently created exchange.
The cryptocurrency world is in a Dogecoin buzz so loud that Ethereum’s ATH is barely noticeable. Dogecoin hit a new ATH but came crumbling after Musk’s sentiments. Many retail investors may find it an excellent opportunity to invest in the coin, but still, you can never be sure about the crypto world.
Elon Musk’s endorsement for his SpaceX project could mean a bright future for DOGE. However, anyone looking to invest for the long-term may want to rethink the decision going by its past performance.