Dogecoin: Expert discusses Elon Musk’s tweets
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When dogecoin (DOGE) hit the market eight years ago, no one expected the “meme cryptocurrency” to be the most talked-about token after bitcoin. But DOGE has been all the rage in recent months, thanks in no small part to the likes of Elon Musk and the GME craze that began on Reddit. Just two years ago, the token was swapping hands for as little as £0.0011 ($0.0015) per token.
Today (April 14), the token has surpassed all expectations, peaking to an all-time high price of £0.105610 ($0.145308), according to Coindesk data.
What exactly has led to the dogecoin’s meteoric rise on the crypto markets?
According to Thomas Perfumo, Head of Business Operations and Strategy at Kraken Digital Asset Exchange, crypto users have been rallying against the traditional institutions of the finance world.
He told Express.co.uk: “As one of the few exchanges that allows clients to purchase dogecoin directly with fiat currencies, such as the US dollar, Kraken saw a significant uptick in DOGE trading activity in late January and early February, which corresponded with the GameStop saga.
“Of course, some traders bought DOGE anticipating a rise in price, but the overarching narrative behind the coin’s 30x run this year is a protest against systemic inequities in the traditional financial industry – dogecoin is, after all, the original ‘meme asset’.
“This is an extension of the value that cryptocurrencies derive from vibrant and growing communities that give rise to network effects.
“Though dogecoin has always been more community-led than utility-led, it’s nonetheless known by over one million individuals. Not many traditional assets have that kind of clout.”
Dogecoin was born in 2013 as a joke, centred on a popular internet meme featuring a smiling Shiba Inu dog.
DOGE’s creators, software engineers Billy Markus and Jackson Palmerin, likely never intended for the token to become so high-profile.
And yet, according to Tom Steltzer, a cryptocurrency specialist at the personal finance comparison site finder.com, interest in DOGE has benefited from the likes of Elon Musk thrusting it into the spotlight.
The South African tech mogul and mastermind behind SpaceX has been frequently tweeting about and sharing memes about dogecoin for months now.
In a bizarre twist, he even vowed to put the cryptocurrency to the Moon.
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Mr Steltzer said: “As a light-hearted memecoin, fogecoin has arguably caught on as a way for new investors to dip their toes in the world of crypto investing.
“This has coincided with a new surge in younger retail investors to both stocks and cryptocurrencies, as things like the GME short squeeze made international news.
“In fact, Finder’s research suggests around 40 percent of those aged between 18 and 34 have now bought at least one cryptocurrency before, with another 21 percent planning to do so in the future.”
But what does all of this mean for the future of dogecoin?
Unfortunately, this is where the waters get somewhat murky.
Mr Steltzer warned dogecoin is simply put, volatile and prone to wild swings – as most cryptos have proven to be.
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It is, consequently, impossible to predict whether the token is going to gain or lose in the long term.
The key to any investment, the expert reminded, is to never invest more than you are prepared to lose.
Others, however, have a much more grim outlook on where dogecoin is headed.
David Kimberley, an analyst at Freetrade, believes DOGE is experiencing a bubble right now, driven by people looking for short-term gains.
He said: “Dogecoin’s rise is a classic example of greater fool theory at play.
“People are buying the cryptocurrency, not because they think it has any meaningful value, but because they hope others will pile in, push the price up and then they can sell off and make a quick buck.
“But when everyone is doing this, the bubble eventually has to burst and you’re going to be left short-changed if you don’t get out in time. And it’s almost impossible to say when that’s going to happen.”
This is doubly true, he added, of the cryptocurrency market where small numbers of investors often hold many of the cards.
The sentiment mirrors a warning from The Financial Conduct Authority (FCA), which branded cryptocurrencies an all-high risk, speculative investment.
The FCA said earlier this year: “If you invest in cryptoassets, you should be prepared to lose all your money.”
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