Investors were certainly hoping for an emphatic “yes.” Dogecoin was priced as such, surging to an all-time high of almost $0.74 prior to the May 8 skit.
However, Elon Musk made a weaker case than many expected.
Elon Musk’s assertion that Dogecoin is a “hustle” didn’t seem to go over well with the crypto enthusiasts that have bought into Dogecoin’s rise. Elon Musk’s self-proclaimed title as the “master of coin” and series of tweets on Dogecoin has inadvertently resulted in Elon Musk’s rise as Dogecoin’s biggest cheerleader.
This, combined with a series of crackdowns on crypto, has led to a perfect storm in the cryptocurrency world. China has followed India’s lead in banning, or at least severely regulating, cryptocurrency usage. All cryptocurrencies have dropped in incredible fashion in recent days on this news.
Indeed, Dogecoin’s recent decline of approximately 50% from the cryptocurrency’s aforementioned high is testament to the idea that Dogecoin investors were hoping Musk would cheer louder. At this point, many believe a whole lot of pumping will need to happen to stop the dumping in crypto.
Let’s take a look at where Dogecoin could be headed from here.
Let’s Not Forget the Origin of Dogecoin
Dogecoin was initially created as a joke by a couple founders set on a mission to create an online community, not get rich quick.
As with other alt coins, its founders sought a fun side project. The affable Shiba Inu picture associated with Dogecoin has created a meme cryptocurrency. And it turns out investors have voted with real dollars rather than “likes” in turning Dogecoin into the fourth-largest cryptocurrency by market cap.
Indeed, the fact that Dogecoin’s market capitalization sits at more than $42 billion after the incredible drop we’ve seen in recent days speaks to the level of over-exuberance in the market today.
Elon Musk’s continued tweeting of Dogecoin and related memes has brought more speculators to the party. Indeed, Musk’s outsized influence appears to have turned what was a joke into a viable investment. Such is the world we live in today.
How High Can Dogecoin Go?
It’s important to keep Dogecoin’s market capitalization in context. A cryptocurrency with no real intrinsic value or purpose outside of the speculative realm has garnered a market cap greater than 323 of the companies trading on the S&P 500 at the time of publication.
Dogecoin’s run to an 11-digit valuation has been incredible. Whether 12 or 13 digits remains on the horizon is the question on the minds of many investors.
Personally, I don’t see how such a move is technically possible. But then again, I’ve been wrong about cryptocurrencies like Dogecoin from the start.
Anything’s possible when it comes to this ultra-speculative space. Experts have placed a range of price targets for DOGE, many of which are well above the $1 level over the medium-term. That’s still some pretty impressive potential upside, relative to equities. However, such a move would push Dogecoin’s market cap into the stratosphere.
Dogecoin: The Bottom Line
Despite the rather incredible downside volatility in the crypto world today, Dogecoin investors are still up roughly 5,650% year-to-date. This 56-bagger for early investors really gives the last laugh to those still holding on for dear life.
Whether these “hodlers” will ultimately be left holding the bag remains to be seen. However, I just don’t see the intrinsic value argument here.
Dogecoin remains one of the sexiest momentum plays in the market. Yes, momentum isn’t in investors favor right now. And Musk’s incessant commentary seems to be falling on deaf ears right now. However, if we see a return to crazy materialize again, anything’s possible from here.
I think we can all agree on this.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.