So far in 2021, Dogecoin has returned 12,000%. Translated into more understandable numbers: Had you bought just $1,000 of DOGE earlier this year you would have come into a small fortune of $121,000.
With this incredible performance it is understandable that you would consider buying Dogecoin, if you haven’t already done so. The big question, here, is whether it will continue to rise as it has been doing so far.
Does it have potential to double, triple or even 10-fold its price?
It could very well do so.
As of this writing, it is the fourth largest cryptocurrency in market capitalization, with a total capitalization that has reached over $90 billion. If it has come this far, why should it stop.
Here are our arguments:
1. People love Dogecoin (and it doesn’t matter that it was originally a meme)
You probably already know the origin of Dogecoin. If not, briefly summarizing it, this cryptocurrency was created by a couple of software engineers as a joke.
We are in 2013 –At that time there was already some speculation surrounding Bitcoin and Billy Markus, a software engineer at IBM, thought it would be funny to create a cryptocurrency based on a meme: an image of his own dog, a beautiful Shiba Inu that gives Dogecoin a face.
Billy Markus, for that purpose, teamed up with Jackson Palmer, a software engineer at Adobe. The two developed Dogecoin.
The most relevant part of this story is that people loved the idea. The official Dogecoin website received more than 1 million hits in its first 30 days of life. The world loves Dogecoin and this, in the cryptocurrency market, is all that matters.
The price of cryptocurrencies is not driven by Wall Street, or by what financial analysts at big banks say, or even by the technology or innovation they bring to the table.
The price of cryptocurrencies is determined by the people.
With the case of AMC and Gamestop shares we already saw not long ago that, when small investors get organized, they manage to move the market beyond what might seem logical and rational.
With Dogecoin it is exactly the same: Its price and market capitalization are beyond what is logical, but none of this matters. The cryptocurrencies have created a paradigm shift in the global financial system, and this is how things now work. We cannot analyze the cryptocurrency market with the same old logic.
People love Dogecoin and, as long as they do, its price can continue to rise exponentially.
2. Elon Musk and his idyll with Dogecoin
Elon Musk, founder of Tesla and unparalleled visionary, has had a strange relationship with Dogecoin for years. At times it might appear that the Tesla founder has given Dogecoin the once over; but he has recently made it clear that he supports the cryptocurrency without reservation:
Working with Doge devs to improve system transaction efficiency. Potentially promising.
– Elon Musk (@elonmusk) May 13, 2021
That the Tesla founder has decided to “work with Dogecoin developers to improve the transaction system” is an unparalleled milestone, whereby Elon shows his full support and involvement with the cryptocurrency.
Remember that Elon Musk is the man capable of driving the price of Bitcoin up or down by 30% in a single tweet. On Twitter he has some 55 million followers who follow him with blind faith, who buy or sell everything that the Tesla founder recommends.
At first Musk used to disguise his praise for Dogecoin with other more “pessimistic” tweets, perhaps to save face with the SEC and not be investigated for market manipulation.
However recently he has decided to support DOGE without reservation, to the point that Elon plans to send a rocket to the moon paid for with Dogecoin. The mission called “DOGE-1” will take place in 2022 and, as Elon says, it will “put the first cryptocurrency in outer space.”.
SpaceX launching satellite Doge-1 to the moon next year
– Mission paid for in Doge
– 1st crypto in space
– 1st meme in space
To the mooooonnn!!https://t.co/xXfjGZVeUW
– Elon Musk (@elonmusk) May 9, 2021
But this is not where Musk’s idyll with Dogecoin ends. He is apparently also studying the possibility of Tesla accepting payments with Dogecoin, another trigger that will undoubtedly catapult the price of the cryptocurrency.
What there is no doubt about is that as long as Elon Musk continues to support Dogecoin as he has done so far the price of Dogecoin will continue to rise.
No one has as much influence in the cryptocurrency ecosystem as Elon does.
3. Dogecoin will continue to rise as long as cryptocurrencies remain in bull cycle
So far, if we historically analyze the cryptocurrency market, we see that there has always been a marked positive correlation between its components, mainly among those with the largest market capitalization.
In other words: all the major cryptocurrencies tend to move together, when Bitcoin rises or falls the others tend to follow its movements.
Currently we are in the midst of Bitcoin’s bull cycle, and all indications are that there is still some way to go for that cycle to run out (especially if we look at the Stock to Flow mathematical model, which has predicted Bitcoin’s, and the entire market’s, bull cycles with great accuracy).
Given that Dogecoin is the fourth largest coin in market capitalization, all indications are that as long as the current Bitcoin bull cycle lasts we will find ourselves in ideal circumstances for DOGE to continue to rise.
Statistical correlation tells us that Dogecoin has a fertile meadow in front of it where it can grow practically without limits.
4. Dogecoin will always be the original “memecoin”
Recently we have seen that multiple copies of Dogecoin have appeared on the market, whose claim is nothing more than to feed on the wake left by DOGE.
Just as no cryptocurrency will ever succeed in eclipsing Bitcoin, being the first of all cryptocurrencies, no “memecoin” will ever succeed in snatching Dogecoin’s prominence.
Dogecoin, as Elon Musk says, is “the people’s cryptocurrency.” Everyone loves the Dogecoin story, the fact that a joke born out of the Internet has ended up becoming one of the world’s leading cryptocurrencies — and the paradigm shift this represents for the global economy.
5. Against buying Dogecoin: it has a significant component of pure speculation
Finally, as a counterpoint to the arguments we have mentioned, it should be remarked that buying Dogecoin has a major speculative component.
All cryptocurrencies have this part of speculation, but those whose behavior has been especially volatile are even more speculative. To give an example, investing in Bitcoin is, in our view, a rather more conservative and sound investment than Dogecoin — although the potential gain will also be lower.
The more speculative an investment is the more return (and the more losses) it can give us. That is why it is convenient to be aware that Dogecoin is a currency with a large speculative component and its expected volatility is high.
In other words, don’t invest your life savings in Dogecoin; be rational and allocate a small position of your total savings or investment portfolio to it.
Bonus: How to buy Dogecoin in 5 minutes with a regulated broker?
Whenever you want to buy cryptocurrencies such as Dogecoin you should be especially cautious, as there are a multitude of scams on the Internet designed to trap the unwary. Similarly, we find a multitude of exchanges located in tax havens, which do not require any type of regulation and do not offer any guarantee to the customer.
One of the few reliable alternatives we found is the broker eToro, one of the most well-known and widely used exchanges worldwide. Based in London and authorized by the CySEC, the FCA, it is a favorite choice of more than 20 million investors worldwide.
eToro.com is the only exchange we can recommend to our readers without reservation. In addition eToro allows you to add funds instantly via Paypal, credit card or bank transfer, among others.
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