Dogecoin has caught the attention of many investors, both from within and without the crypto sector. This meme-based cryptocurrency has become one of the best-performing assets of 2021, and even managed to reach the 4th spot on the crypto market cap list. So, what makes Dogecoin so interesting, and where do its massive price spikes come from?
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Dogecoin - What is it all About
Jackson Palmer and Billy Marcus, two software engineers interested in poking some fun at Bitcoin, created Dogecoin in late 2013. However, while many call it just a meme cryptocurrency, its blockchain might have some merit. Dogecoin’s underlying technology originates from Litecoin, which in turn originates from Bitcoin. It uses the scrypt mining algorithm, and has an unlimited supply of coins.
When it comes to its intended use cases, Dogecoin’s main purpose was to be a tipping system on Reddit and Twitter. This would make DOGE a quick, cheap, and easily transferable cryptocurrency that would reward content creators for their efforts. However, the cryptocurrency became valuable not because of this use case, but because of another, unintended one.
The cryptocurrency sector was always populated with a much younger audience than the average financial market. However, as the market matured over the years, there was less and less space for lighthearted content. Dogecoin became the main outlet for any form of fun activity in the sector, as more serious investors, corporations and institutions started to take over other cryptocurrencies. This gave Dogecoin a unique appeal which helped it get the support of the community, as well as several celebrities, including Elon Musk, the CEO of Tesla.
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All Aboard the Hype Train!
There is no denying that Dogecoin has received massive amounts of attention from investors from across the globe. Its price growth has been followed not only by its community, but also by the world’s largest media outlets. However, DOGE was once a cryptocurrency with a fairly stable price - so what happened?
Dogecoin was influenced by two major factors that severely impacted its price in 2021:
- The WallStreetBets subreddit
- Elon Musk
The notorious WallStreetBets subreddit, which caught the public’s attention at the time due to its Gamestop saga, decided to head over to the crypto sector, and invest in Dogecoin. On top of that, tweets from well-respected celebrities such as Elon Musk that openly showed support towards the cryptocurrency helped its price increase tremendously.
While its price movements were always hype-related, Dogecoin didn’t just pump and dump on each supportive tweet or Reddit post. In fact, the cryptocurrency always kept a part of its gains and prepared for the next move. With more and more support coming from various communities and celebrities, Dogecoin’s price kept rising, ultimately reaching a peak of an astonishing $0.75 per DOGE and a market capitalization of close to $100 billion.
What is the Market Doing Now?
As we mentioned above, Dogecoin is heavily influenced by the hype built around it rather than by its technology and use cases. This means that, while positive social media posts propel its price up quickly, the same happens in reverse. Elon Musk’s long-awaited SNL performance ended up with a swift market crash as the CEO of Tesla basically called Dogecoin a hustle.
However, Musk recouped by announcing a Dogecoin moon mission. He stated that his rocket company SpaceX will start accepting Dogecoin as payment, as well as that the company will launch a “DOGE-1” satellite to the moon in 2022.
The overall community is also interested in taking DOGE to $1 before it reaches the moon - and if the social media campaigns continue, this might be more than just plausible. Many analysts are expecting DOGE to either briefly hit $1, or reach a price just below it, before experiencing another crash.
What’s Next in Store for Dogecoin?
Dogecoin is certainly one of the more interesting cryptocurrencies out there - if not because of the technology, then because of its community. One thing is certain, and that is that Dogecoin will remain strong for as long as it has such a supportive community.