Dogecoin, which originally started out as a satirical alternative to bitcoin, has now amassed a $34 billion valuation— all within the past week.
First created in 2013 by software engineers Jackson Palmer and Billy Markus, dogecoin was intended to poke fun at other, more serious cryptocurrencies, such as bitcoin and ethereum. Now, amid the ongoing crypto boom that has skyrocketed during the pandemic, the meme coin has benefited from the added attention, and expanded its community online.
The meme cryptocurrency now has a total market value of $34 billion, after soaring by 300% in the past week to an all-time high of almost 28 cents on Friday morning. However, this is not the first time the meme coin has been subject to a wild rally; it was sent soaring on several occasions in the past year, after Tesla CEO Elon Musk posted numerous cryptic tweets referencing dogecoin, even calling it his “fav” cryptocurrency.
The latest rally, though, is likely the result of excitement surrounding the Coinbase debut, which has sent bitcoin and etherum prices soaring to record-highs. The dogecoin rally has also translated to the Robinhood community, as the US online brokerage reported a significant outage in its crypto trading feature amid “unprecedented demand.”
However, the current dogecoin rally has caught the attention of analysts, who are cautioning the formation of a potential bubble in the crypto space. David Kimberley, an analyst at the UK investing app Freetrade, told CNBC that the sudden rise in dogecoin is merely an example of the 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,” he explained.
“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,” Kimberly continued.
Information for this briefing was found via CoinGecko and CNBC. Thee author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.