Dogecoin has had an impressive rally in the past few years. In the five years, the coin’s price has risen by more than 100,000% against the US dollar. Between November 2017 and May this year, the coin had risen by more than 124,000%.
In contrast, gold has risen by more than 40% in the same period while Bitcoin has risen by about 8,000%. This makes Dogecoin one of the best performing assets in the past half a decade. So, is it too late to buy Dogecoin?
What is Dogecoin?
Dogecoin is a meme coin that was started in 2014 by Jackson Palmer and “Shibetoshi Nakamoto.” The coin was started as a joke with the goal of being an alternative to Bitcoin and Litecoin. Like BTC,
Dogecoin is a proof-of-work cryptocurrency that is mined using computers that solve complex mathematical calculations.
Dogecoin can be used as a peer-to-peer currency. This means that people can send it to one another in a relatively simple way.
The currency can also be used to shop where it is accepted. Because of its volatility, very few companies accept it as a means of payment. AMC, the biggest movie theatre company in the world, has hinted that it will start accepting Dogecoin.
Dogecoin’s popularity has seen it move up the cryptocurrency radar. Today, Dogecoin has a market capitalization of more than $28 billion. This makes it the 10th biggest cryptocurrency in the world. To put it in perspective, Dogecoin is more valuable than Southwest Airlines, Lazard, United Airlines, and Box.
What is the future of Dogecoin?
Like most cryptocurrencies, most people who own Dogecoin do so because of its investment potential. Most holders don’t use it as a medium of exchange. Therefore, its future price action will mostly depend on the overall performance of other cryptocurrencies.
In my view, I expect that cryptocurrencies will do relatively well in the coming years as they become the favourite investment options among young people.
However, the biggest risk for the currency is its close association with Elon Musk. While he has been good for the coin, there is also a possibility that he could change his mind. This, in turn, will push the coin lower.
Another risk is that most Dogecoin in circulation is held by a small group of people or entities. This ownership can push its price lower if they decide to exit their trades. You can visit Bankless Times to learn about how to buy Dogecoin.
Why DOGE has risen
There are several reasons why the Dogecoin price has jumped in the past few years. First, this rally is mostly because of its correlation with other cryptocurrencies. A closer look shows that most digital currencies have surged in the past few months.
Indeed, the total market capitalization of all cryptocurrencies tracked by CoinGecko jumped to almost $3 trillion. This makes it one of the biggest asset classes in the world. It is hard to see a cryptocurrency that has not jumped in the past five years.
Second, like all cryptocurrencies, DOGE has done well thanks to the easy money policies implemented by the Federal Reserve. In most cases, risky assets tend to do well in a period of low rates.
Elon Musk and Dogecoin
Third, and most importantly, the coin has jumped sharply because of Elon Musk, the founder and CEO of Tesla and SpaceX. Musk is the richest person in the world with a total net worth of more than $310 billion. According to Bloomberg, his net worth is $100 bigger than that of Jeff Bezos, the second-richest person in the world.
Elon Musk is admired heavily by many young people who love his accomplishments at such a young age. He has more than 65 million Twitter followers.
Therefore, his endorsement for Dogecoin has had a major impact on the coin. In a past tweet, he confirmed that he owned some of the coins. His tweets and comments have given many young people an incentive to buy the coin.
In addition to these, Dogecoin’s price has risen because of its popularity among social media platforms like Twitter and Reddit. Most importantly, it is one of the most popular coins in trading platforms like Robinhood and Cash App. It has become a popular way for people to tip hotels and other workers.
Dogecoin technical analysis
On the weekly chart, we see that the DOGE price has been in a tight range in the past few weeks. The coin is trading at the same level as the 50-day and 25-day moving averages. It has also formed a bullish pennant pattern, which is usually a positive sign.
Also, it has struggled to move below the key support level at $0.1600. Therefore, there is a likelihood that the coin will have a bullish breakout in the coming weeks. If this happens, the next key level to watch will be at $0.72, which was it’s all-time high.