Considering how it was created as a joke, Dogecoin is particularly captivating for the crypto universe, at least for the time being.
The previously obscure cryptocurrency isn’t going to be usurping Bitcoin anytime soon, but there’s considerable momentum at play here.
Dogecoin is based on a wildly popular meme from 2013 that featured a dog with Comic-sans font phrases, often without discernible meaning. According to CNBC, it was meant to be a fun “alternative to Bitcoin [that] has since found a growing community online.”
As is common with cryptocurrencies, Dogecoin is subject to volatile fluctuations in price, but has been gaining in popularity this year. Reddit subgroup r/SatoshiStreetBets helped propel Dogecoin into the limelight as part of a concerted effort to bring more attention to cryptocurrencies. The subreddit proclaims itself to be the “Crypto version of r/WallStreetBets,” which helped influence the rise of GameStop shares early this year.
“One of the significant factors in Dogecoin’s surge is the crypto market booming. With the market up, the vast majority of cryptocurrencies have increased in price. However, Dogecoin is a special case as many other factors have contributed to its rise. One of which is the embracement by prominent figures, such as Elon Musk, who has frequently posted on Twitter about the coin and caused significant price movements,” notes Ben Weiss, CEO of CoinFlip, the largest cryptocurrency ATM provider in the world.
On Wednesday, Dogecoin hit 10 cents for the first time, growing rapidly over the next few days. As of mid-Friday, its total market cap had surpassed $52 billion according to CoinDesk.
“Another individual who has gotten behind Doge is Mark Cuban, who began accepting it through the Dallas Mavericks’ website, showing that it can be a viable currency. Another factor is accessibility. Doge is now much easier to acquire than ever before. There are options to purchase on many apps and exchanges, such as Robinhood, and now on over 2,000 cash-to-crypto ATMs in the US, through CoinFlip,” adds Weiss.
Yet many analysts see Dogecoin as a risky bet at best, and its recent rise as indicative of a crypto bubble. Cryptocurrency risk management platform TRM Lab’s Akand Sitra points out in a LinkedIn post that “65% of all Dogecoins are kept in just 98 wallets across the world…(and) 5 wallets control 40% of the entire dogecoin supply.”
Dogecoin, argues Sitra, is a “scam” of holding onto the coin until it multiplies enough and then dumping and cashing out, causing a crash in value. “The Dogecoin bubble will burst by the end of this year, easily,” he added.