Can Dogecoin ($DOGE) actually go anywhere? Maybe…!
If you haven’t heard of the unprecedented pump of Dogecoin ($DOGE) over the past few days, you probably haven’t been reading the news. (Because — hint — it’s all over the news)
So what’s going on with DOGE? And more importantly, can the hype survive to a degree where DOGE becomes a legitimate investment opportunity?
First, a quick background on DOGE and its relation to the Wall Street Bets community.
Quick recap: what is Wall Street Bets?
Okay, so there’s the r/WallStreetBets subreddit, and there’s the movement — they’re sort of aligned.
The subreddit is the place where it all started: pumping GameStop (GME), AMC (AMC), and all the other sh*tty stocks. This was the original home of the get-rich-quick-but-also-get-back-at-the-institution type traders. Then, a branch of the community moved to platforms like Discord and Telegram to talk more candidly once the subreddit caught heat for its effects on GME and was briefly banned. These platforms are what began to truly foster the movement because they’re more private and direct.
The movement itself is more about market destabilization and revenge on financial institutions who screw the general population for a living. Most members don’t seem to align themselves with a particular political affiliation — rather, they just want to watch the financial system burn, watch Wall Streeters cry, and make a bit of money in the process.
If you’re curious to learn more about what’s been going on in the group, I wrote a piece on that as well.
What does Dogecoin have to do with anything?
The story of DOGE — before 2021
DOGE is a cryptocurrency token which originated as a fork of Bitcoin in 2013, with its primary value proposition being that it was a meme. As a result, it actually garnered significant public attention for a while, despite having no practical use other than payment transfer.
DOGE in the context of Wall Street Bets
Since then, it has seen multiple price spikes after being a hot topic of Twitter’s short attention span a few times. Most recently, it gained attention through Elon Musk’s support of it in mid January — and now, it’s only gaining momentum because of a WallStreetBets Twitter influencer account, and subsequently, the ever-expanding Wall Street Bets community.
The original blast that placed DOGE in Wall Street Bets’ spotlight is said to have originated from SatoshiStreetBets (a subcommunity of Wall Street Bets that focuses on cryptocurrency markets).
DOGE—among other assets like AMC (AMC), Nokia (NOK), and BlackBerry (BB) — have been the topics of the WallStreetBets Telegram and Discord pages for the past five days. And over this time, the hype has also spread through mainstream social media platforms like TikTok and Facebook as well, which has only helped inflate the prices of these assets.
A key influencer: Elon Musk
Throughout the past week, Elon Musk has really been pushing Dogecoin, publicly voicing and tweeting his support for it numerous times. In fact, just today, in voice chat platform Clubhouse, Musk said that while DOGE is “made as a joke,” it would be the most “entertaining and ironic outcome” if it became the “currency of earth in the future.”
Coming from one of the richest people in the world, that’s a pretty attention-grabbing speculation. Not to mention, Musk has voiced his support for the token publicly multiple times. And, with all this somewhat-comedic support, the price of DOGE has been moving optimistically. As of the past two days, it has somewhat, oscillating roughly between $0.040 (₿0.00000125) and $0.028 (₿0.00000092), up by over 300% from the previous week.
“Fate loves irony” — Elon Musk
Does Musk have a point?
Well… nobody can really say. But yeah, kind of.
See — we saw an identical scenario with Bitcoin (BTC/₿), which also started out completely worthless a decade ago, hitting an all-time high of over $41000 just a few months ago… finance “experts” said that such a thing would never, ever happen.
Even though Musk’s love for DOGE is mostly out of comedic value, it may not be too far off from the reality of the future.
So —will DOGE become the currency of the future? No, definitely not.
BUT it could very well remain a key player in cryptocurrency markets. Just a couple days ago, its market capitalization reached $8.2 billion, making it the 9th largest cryptocurrency by market cap (for context, BTC’s market cap is roughly $625 billion). Since then, its market cap has fallen significantly to a meager $4.2 billion, and yet the hype lives on, in Telegram, Discord, Reddit, and even TikTok.
Either way you slice it, a market cap of $4.2 billion is no joke.
With all this great stuff, it’s important to mention that, firstly, Dogecoin’s community (the community that hypes it up, spreads it around, and presumably uses it) is not very vibrant or great in any particular way. Secondly, the Dogecoin organization states on its website that the project was created as a joke, and that the founders never took the project too seriously.
Judging from both of these facts, we probably shouldn’t expect any ground-breaking technological innovations from the network. Either way, the coin performs to the bare minimum of what it’s supposed to do: provide a store of value.
So, why does DOGE have potential?
Point #1: MOVING TOWARDS ADOPTION (it kind of holds value)
In case you hadn’t yet noticed, the price of DOGE is not $0.00. Clearly, there’s some demand for it, and has been for the past 7 years, and thus it holds some value. It even has its own symbol now (Ɖ).
Moreover, the fact that it is listed on Robinhood, along with other popular cryptocurrencies, is actually a key aspect of its bull run and its potential for future growth. This is because an armchair-trading platform like Robinhood allows people who have no idea what cryptos are to buy DOGE, hold it, and even use it.
The main issue here is that the price of DOGE is almost entirely based on speculation since it’s not a “normal” cryptocurrency that people actually use — so the value that it holds isn’t stable at all. And yet, there’s nothing stopping it from becoming useful and eventually mainstream in the future. After all, you can still buy stuff with it.
From a more practical viewpoint, DOGE may also benefit from the adoption of crypto debit cards. These are debit cards, soon to be offered by major exchanges like Binance and Coinbase, that allow holders to easily spend their crypto holdings in the real world. For example, if you own DOGE on Binance and you have a Binance card, you’ll be able to convert small amounts of your DOGE holdings into fiat instantly to pay for real-world purchases. In essence, this means that, even if DOGE itself doesn’t do well relative to BTC or other cryptos, card holders may have less incentive to dump DOGE in bulk.
Point #2: LOTS OF FREE PROMOTION (celebrities love it)
Today, attention is all that matters. If you have a following, you are an asseet that holds value. Celebrities have been hyping DOGE up a lot recently, with many suggesting that they hold large amounts of the token.
In fact, celebrities like rapper Lil Yachty, record executive Snoop Dogg, and even ex-porn star Mia Khalifa, have been pushing it for a while now. With such mainstream attention, it’s really impossible to ignore DOGE.
In technical terms, all of the revamped attention that the token has attracted is basically just free marketing. If, in fact, DOGE is able to keep public attention for a few more weeks — or just enough time to establish itself as a household meme in finance communities — it wouldn’t be unreasonable to expect its price to grow through 2021.
“I shouldn’t have to say it but… BUY $DOGE” — Lil Yachty on Twitter
Point #3: WE’RE NOT THERE YET (nothing is normal until it’s normal)
Right now, we can’t say that “DOGE will [become/not become] a mainstream token in the year 202x” simply because it’s not 202x yet!
Obviously, there’s no guarantee that DOGE will increase in value from now on, but, as with any celebrity-backed asset, it has room for (a lot) of growth. On the flip side of things, though, just like BTC, DOGE has no inherent value because it is based on absolutely nothing, and is not a part of a larger self-sustaining economy (in contrast with tokens like ETH in Ethereum or DOT in Polkadot). This, in turn, makes it a really, really unpredictable investment.
But, again, remember: Bitcoin also wasn’t “a good investment” throughout 2011–2014 because nobody really thought it would — or could — go anywhere. Obviously, this sentiment was as incorrect as could be. Thus, as long as the value of DOGE continues to be backed by a dream, meme, belief, or even just a few passionate Twitter accounts, its value will remain.
Therefore, if you’re someone who loves to calculate P/E ratios and sift through balance sheets, you’re not going to be happy when you try to research DOGE.
What are the major takeaways here?
Up until 2021, the crypto community would laugh at Dogecoin and call it all sorts of nasty things, from “sh*tcoin” to “dogsh*tcoin” to… well… just “a sh*tty investment.”
Recent events proved the non-believers wrong. DOGE may very well prove to be a terrible investment in the long run; this remains the crypto community’s sentiment, which makes sense (because on an objective level, DOGE does seem like a pretty bad long-term investment). Yet, so far we’ve seen such huge price hikes that another 5x or 10x isn’t too far out of the realm of possibility, either!
Recall that finance experts also wrote off GME and AMC as sinking ships— in a theoretical sense, they were correct because both companies had been bleeding out for years, but in practice, they were oh-so-wrong. And with any luck, if hype and attention keeps strong, DOGE may really blast off to the moon because it’s all about being in on the joke.
So: the real takeaway here is that while DOGE probably isn’t the best addition to your retirement savings portfolio, it could prove to be a gem for those who actively track their market positions. Just remember that you never know who’s going to tweet “#buydoge” next.
Afterthoughts
A note on Wall Street Bets’ sentiment
The Wall Street Bets community, who is largely behind the mainstream, retail push for DOGE, has been urging their community to hold, hold, buy, and hold DOGE no matter what happens. While this doesn’t directly support their movement’s ideological causes, it still presents a perfect opportunity to show boomer Wall Streeters a big, fats middle finger.
*** It seems that much of the recent (72-hour) buying pressure has come from the circulation of phrases like “DOGE to the moon 🚀” around Gen-Z-oriented social media platforms like TikTok and Instagram that, in turn, contain immense communities of young, retail traders who trade primarily based on sentiment.
Altogether the “mooning of DOGE” isn’t a bad thing at all, and in fact is pretty comedic. It just goes to show that navy blue suits, balance sheets, and coke will only help your portfolio until internet trolls band together and start buying up random crap.
A note on trading in crypto markets
In general, buying DOGE may not be such a great idea if you aren’t familiar with crypto markets.
For one, if you choose to buy, you should keep a very close eye on your investment. In crypto bull markets (as we’re experiencing currently), we tend to see negative price movements that correlate roughly with those of Bitcoin, while positive movements may not associate with Bitcoin at all.
What I’m getting at here is that if the price of BTC happens to tank, then it’s very likely your DOGE will tank too. So: if you buy, make sure you buy at a price that you’re comfortable at, with money you’re willing to lose, so that you’re not left holding the bag if prices plummet and never recover. 😜
Even if your DOGE holding appreciates, though, it likely may not rise as much as baseline assets like BTC or ETH — and it would be a real shame if you made 15% on DOGE just to have BTC outperform it by a factor of 10. So, the point here is to just be very careful and do your research.
Don’t take this as investment advice. These are just thoughts. Remember, also, that in order to generate profits from your investments, your assets should end up with more value than their cost bases. Don’t buy DOGE if you don’t think it’ll appreciate in the long run (obviously).
