Dogecoin (CCC:DOGE-USD) has been making headlines in April. DOGE started the year at just $0.005. It is now around 31 cents. Put another way, the price of Dogecoin is up about 6,400% so far this year. The proverbial $1,000 invested in DOGE in early January would now be worth around $65,000.
The past year has seen a surge in the value of cryptocurrencies, including Bitcoin (CCC:BTC-USD), Ethereum (CCC:ETH-USD), Litecoin (CCC:LTC-USD), Cardano (CCC:ADA-USD) among others. Bitcoin, the most popular name, is up 93% in 2021, priced just over $55,000.
The pandemic has brought record-low interest rates in many countries. Meanwhile, retail investors worldwide have been looking at alternative assets for trading and investing. Some have concentrated on cryptos as a store of wealth — a role that would typically be offered by gold, silver, or other commodities.
With a market capitalization of over $40 billion, Dogecoin is now one of the most valuable cryptocurrencies. By comparison, the current market caps of several of the highly followed stocks on Wall Street are:
- Albertsons (NYSE:ACI): $9.5 billion (current price around $20)
- Baidu (NASDAQ:BIDU): $73.0 billion (current price around $207)
- Boeing (NYSE:BA): $135.9 billion (current price around $234)
- Etsy (NASDAQ:ETSY): $25.4 billion (current price around $205)
- Palantir Technologies (NYSE:PLTR): $35.9 billion (current price around $21.50)
These numbers might make you wonder what might be next for cryptos, in general, and Dogecoin specifically. Despite potential short-term volatility and profit-taking, given investors’ risk appetite for cryptos, Dogecoin will likely see new highs in the coming months.
Reddit Traders and DOGE
Dogecoin was introduced by software engineers Billy Markus and Jackson Palmer in 2013. They wanted to create an instant payment system free from traditional banking fees. Unlike Bitcoin, DOGE does not limit the number of coins that can be in circulation. InvestorPlace.com contributor Mark Hake, CFA, has recently written about the inflationary nature of Dogecoin.
You might have heard that Dogecoin is referred to as a “meme cryptocurrency.” Markus and Palmer wanted to also bring in the “fun” element by adding the face of the Shiba Inu dog from the “Doge” meme as its logo and namesake. In its early days, Dogecoin was mainly used for “thanking” individuals on the internet for “positive acts,” such as an idea or a web-related service. But since 2013, the fan base has grown considerably.
Recent research by Ian Young of the University of Colorado, Colorado Springs, highlights, “Dogecoin has found a very unique, and somewhat niche, place in society as “The Internet Currency”… [T]he community of Dogecoin users have accomplished some rather strange feats, from sponsoring a National Association for Stock Car Auto Racing (NASCAR) driver (Frum, 2014), to sending the Jamaican bobsledding team to the 2014 Winter Olympics in Sochi, Russia (Abbruzzese, 2014) as an homage to the 1993 movie Cool Runnings.”
Then, January 2021 saw the start of significant rallies in Gamestop (NYSE:GME) and AMC Entertainment (NYSE:AMC), mostly due to Reddit traders. As these retail investors searched for the next trend, Dogecoin piqued their interest. In fact, April 20 became Doge Day. The ultimate aim for Dogecoin investors is to get the crypto to the $1 threshold, or “to the moon.”
There has also been celebrity support. Elon Musk, CEO of Tesla (NASDAQ:TSLA), whose job title is now “Technoking of Tesla, Imperator of Mars,” wants Dogecoin listed on the digital crypto platform Coinbase Global (NASDAQ:COIN) for increased accessibility for the masses. One half of the music duo OutKast, Big Boi, has made it a mainstay of his 1.6-million-follower Instagram feed.
In addition to Musk’s personal approval of Dogecoin, Tesla has recently announced the purchase of $1.5 billion in Bitcoin and used Coinbase to initiate the investment. There are now many trading days when prices of BTC and TSLA stock move in tandem.
The Bottom Line on Dogecoin
Every dog has its day, and DOGE has just had its on April 20. Although it has not yet topped the $1 mark, investors are still hopeful. As long as the fanbase persists, its market cap is likely to reach new highs.
However, calculating the fair value of a Dogecoin is difficult. Is it now undervalued or overvalued? After all, it is a speculative asset with almost no retail use within the financial system.
Given the positive momentum behind cryptos, Dogecoin will likely pass 50 cents in the coming months. However, $1 might take longer. DOGE’s price will ebb and flow for the time being.
If you’re a long-term investor, you might consider investing in Dogecoin, with the clear understanding that it is a speculative investment. Price could “go to the moon” or might simply tank, too.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.