Dogecoin: Once A Joke Crypto, Now Has $20B Market Cap; Anyone Still Laughing?
Andy Hecht | Feb 09, 2022 16:19
This article was written exclusively for Investing.com
- 12th leading crypto in an elite class
- DOGE began as a joke...
- ...But price action has been head-spinning
- Poster child for crypto speculation
- Musk versus regulators for future 'people's crypto'
The cryptocurrency asset class had a rough start to 2022. Though extreme volatility can go both ways and we're still in the early part of the new year, the asset class continues to suffer from the correction that followed the Nov. 10, 2021 record high in Bitcoin and Ethereum.
On that day, the leading cryptocurrencies hit record peaks, then reversed, settling below the previous day’s low, putting in a pair of bearish key reversal trading patterns. Their prices more than halved in value at the most recent lows and are sitting much closer to the January 2022 bottoms than the mid-November highs.
Dogecoin, on the other hand, reached its record high in May, months before BTC and ETH hit their most recent peaks. DOGE is the crypto that uses the cute Shiba-Inu dog as its mascot and brand, and is a top-tier cryptocurrency with a market cap in the top 99.93% of the asset class.
Since May, DOGE has been trading in a bearish trend, making lower highs and lower lows. In contrast, the two top cryptos have recovered from their lows at half the values of their highs.
On Feb. 8, DOGE traded at less than one-quarter the level hit in May. However, the market cap remains in the top 10 of all cryptocurrencies in the asset class.
h2 12th Leading Crypto In An Elite Class/h2DOGE remains one of the select few in the cryptocurrency asset class as the 12th leading member.
Source: Investing.com
As the chart shows, at 15.66 cents per token on Feb. 9, DOGE had a market cap of more than $20.78 billion. Out of more than 17,400 cryptos, only 19 were worth more than $10 billion, and 88 had market caps over the $1-billion level.
h2 DOGE Began As A Joke.../h2The 12th leading cryptocurrency began as a goof on the asset class. Software engineers Billy Markus and Jackson Palmer created the Dogecoin payment system in late 2013 as a joke.
An IBM programmer from Portland, Oregon, Markus wanted to differentiate his crypto from Bitcoin, which was mysterious, with many doubting the token's creator, Satoshi Nakamoto, even existed. Palmer, who worked for Adobe, purchased the domain dogecoin.com, using the Shiba Inu dog as a mascot. On dogecoin.com , the mascot’s picture is prominent, and the description states:
h2 ...But Price Action Has Been Head-Spinning/h2Get The App
Join the millions of people who stay on top of global financial markets with Investing.com.Download Now“Dogecoin is an open-source, peer-to-peer digital currency, favored by Shiba Inus worldwide.”
Crypto parody notwithstanding, DOGE’s price action has been anything but a joke. Markus and Palmer have likely laughed their heads off at the success of the digital token they started as an intellectual spoof of Bitcoin.
Source:
The chart shows that DOGE was worth a fraction of one cent from December 2013 through early 2021, when it broke above the one-penny level. DOGE reached a high of 68.48 cents per token in May 2021. While the price declined by more than 77% since the May high, DOGE remains far above its price levels from 2012 through early 2021.
Plus, a market cap above $20-billion is nothing to laugh at. Pittsburgh, Pennsylvania-based materials giant United States Steel Corporation (NYSE:X), which closed yesterday at $23.19 per share, has a market cap of $6.27 billion, which means DOGE is worth more than triple the industrial commodity producer.
h2 Poster Child For Crypto Speculation/h2The popularity of the Shiba Inu has soared along with DOGE’s market cap. The dog is not just the token’s brand, it's also a poster child for the wild speculation endemic to the cryptocurrency asset class.
Most of the more than 17,400 cryptos floating around in cyberspace will likely wind up as cyber dust in the coming years. Some of the tokens are scams while others will fail to reach the critical mass necessary to function as a means of exchange.
Everyone loves a bull market, and investors and speculators have been buying tokens in an almost blind furor as they seek to identify and own the next crypto that will yield Bitcoin, Ethereum or even Dogecoin-like returns.
h2 Musk Versus Regulators For Future Of 'People's Crypto'/h2In 2021, the world’s wealthiest person, Elon Musk, gave DOGE a shot in the arm on Twitter after which the token’s price soared. On Sept. 12, the founder and CEO of Tesla posted a picture of his latest family member.
Source: Twitter
Floki is a real-life Shiba Inu. When asked why he supports and owns DOGE, Musk replied :
“Lots of people I talk to on the production lines at Tesla or building rockets at SpaceX own DOGE. They aren’t financial experts or Silicon Valley technologists. That’s why I decided to support DOGE. It felt like the people’s crypto.”
Musk has said he personally owns three cryptos: Bitcoin, Ethereum and Dogecoin. Each time he tweets about DOGE, the price tends to move higher. When Time Magazine selected Musk as the 2021 person of the year, the price moved higher as well.
Meanwhile, many crypto analysts believe Musk is a DOGE-whale, someone who owns a substantial percentage of the total cryptocurrency. The ownership and high-profile tweets likely make Washington regulators apoplectic.
The regulators and legislators have stated that they will be “protecting the public” from wild speculation. However, the real underlying reason is that the cryptocurrency asset class is a challenge to the government’s control of the money supply, the root of a government's power. Cryptos are a libertarian fintech offshoot that returns the power to individuals as crypto values are solely a function of bids to buy and offers to sell the tokens.
Musk is no stranger to butting heads with regulators and legislators. The SEC fined and sanctioned him for suggesting to Tesla (NASDAQ:TSLA) short-sellers that he could take the company private. He has called Massachusetts Senator Elizabeth Warren “ ” and a “fraud.”
When Vermont Senator Bernie Sanders commented that “Jeff Bezos and Elon Musk don’t pay a nickel in federal taxes,” Musk snapped back , “I keep forgetting you’re still alive.”
When regulators begin to address cryptocurrencies, expect DOGE to be at the top of their list as it is one of the most speculative tokens in an asset class rife with speculation.
This past September, Musk said:
“It is not possible to, I think, destroy crypto, but it is possible for governments to slow down its advancement.”
Still, betting against Musk has been a losing proposition. His love of the Shiba Inu, DOGE and his ability to rock the boat sets up an epic battle between the crypto that began as a joke and regulators’ desire to put a leash on speculation.
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