I’ve been writing a lot about cryptocurrency lately because I feel like that is all you hear about in investing news. But Dogecoin showed everyone why when the price of 1 Dogecoin (DOGE) skyrocketed 203% in just 24 hours. Within the past week, Dogecoin has had an insane 452% increase. Its value reached its peak early this morning, and it has been on a downhill slide since then. Besides making people kick themselves for not investing in this earlier, this spike has also raised questions and worries about a potential bubble effect in the crypto market.
Dogecoin was literally created as a joke, and it now has a market value of over $40 billion. This spike has added over $20 billion to Dogecoin’s market value. The fact that Dogecoin doubled in value has people asking why this happened? There are multiple factors that played into this rapid spike in value, but the popularity effect might be one of the biggest reasons.
Cryptocurrency has been all the rage over the past couple weeks with Bitcoin hitting its record of more than $64,000 per coin and Ethereum reaching it new record when it topped $2,500. Part of this crypto craze was Coinbase releasing their DPO on Wednesday. Clearly, there has been a lot of excitement around cryptocurrencies building over the past week. All of this combined with Dogecoin’s biggest supporter, Elon Musk, sending out the tweet pictured below where he said, “Doge Barking at the Moon”, sparked people to go crazy with buying Dogecoin.
I unfortunately was jumping on the Dogecoin bandwagon too late and the fact that it had such a dramatic spike which is being immediately followed by a slow crash makes me very wary about buying in at its peak price. In my previous blog post, “How to Buy Bitcoin and Use Coinbase“, I talked about buying Bitcoin (which has been hovering around its peak price) which I view as a more long term investment because it has so much big institutional support, with strong potential to become an actual widely used currency. Dogecoin on the other hand, I view as more of a quick trading asset.
What are your thoughts on Dogecoin? Are you buying some and hoping it keeps shooting to the moon? Leave me a comment with your thoughts on Dogecoin, Bitcoin, and cryptocurrency overall. Is it all a hype bubble that will burst soon?