The entire experience of owning Dogecoin is filled with ups and downs. With the future of the currency undetermined, its volatility is likely to continue.
It all began with the Shiba Inu dog.
The founders of the infamous meme cryptocurrency Dogecoin began a movement that started from the dark corners of the internet. Small subreddits powered the coin early on, generating enough buzz about the currency to enjoy a few outlets continuing the momentum.
The coin began, according to the Robinhood app, at $0.0002 around 2016 which featured a large bump to $0.007 as the media became aware of the momentum. The coin then fell down and remained stable around $0.004. The original floor of the coin’s price was raised with this initial push.
It wasn’t until the subreddit Wall Street Bets blew up that some redditors attempted to push Dogecoin. As Robinhood and other platforms shut down access to stocks like Gamestop and AMC, users turned to cryptocurrency as the next target to push up in value, soon enough, the coin reached $0.01 and then went as high as $0.07.
The currency was pumped up through the subreddits and the more it grew, the more noise grew from it. There were various moments in which the coin was trending on Twitter with various users constantly tweeting about making the coin “go to the moon” or have it reach $1.
The second wave of support for the coin could only take it so far as it eventually hovered around $0.05 following the push. The days following featured high levels of volatility as the coin would continually be pumped and dumped.
This strategy involves buying the coin at “dips” where several people sell due to any reason and the value of the coin falls. Buying at low points and selling at high points is risky business as the trader can either lose out on more potential gain or buy at a point too high that it will not end up reaching.
The volatility of cryptocurrency is centered around various factors such as the media narratives around the currency, which are adopting it as a means of purchasing a good, and the overall knowledge of cryptocurrency from the backers.
According to eToro, Bitcoin is one of the most volatile cryptocurrencies due to their size. A lot of Bitcoin’s value stems from projection about its viability and future as a currency. When a more optimistic report comes about the coin, people get excited and back the coin.
“A lot of it has to do with the uncertainty of bitcoin as a viable form of currency or store of value. Sprinkle in questions about how bitcoin is currently being used and unethical trading practices by cryptocurrency exchanges, and you have a recipe for wild price swings.”
Dogecoin’s volatility is centered around similar principles, but there is a stark difference between both coins: how people view its future.
Bitcoin is being adopted constantly as a source of payment for various items. Tesla adopted it as a payment method and several other vendors as well. This type of narrative creates excitement about the currency and its future.
Dogecoin’s value and excitement is more centered around its prospects as a near future profitable coin. The goal of many people backing the coin is to reach $1. This milestone is referred to as “the moon” and it remains the point in which the true future of the coin will be revealed. Either the coin tanks in value due to everyone selling at one time or it remains afloat at a higher floor.
Even before the coin reaches this point, the value will fluctuate as more news and information circle about the coin. In his now infamous appearance on Saturday Night Live, Elon Musk’s appearance was a huge driver for the coin.
Musk took to Twitter since the boom in January to boost the value of Dogecoin with constant tweets and retweeting memes related to the dog-themed coin.
Along with several other famous people, Elon became the face of the coin which prompted a lot of excitement for holders. The value of the coin shot up to as high as $0.75.
Then, during his performance on Saturday Night Live, Musk referred to the entire industry as a “hustle” and repeatedly failed to define what the currency was in any serious manner.
“It’s the future of currency,” he said at one point in reference to Dogecoin during the sketch. “It’s an unstoppable financial vehicle that’s going to take over the world.”
The ripple effects of his performance resulted in DogeCoin plummeting all the way down to $0.47.
The coin, at the time of printing, rebounded a good amount to $0.53, with news of Elon Musk’s SpaceX promising to fund a mission to put Dogecoin on the moon with a rocket and parts all bought with Dogecoin.
With all of the peaks and troughs, the coin is left in a spot with its future unclear and the next jump or fall without any sort of timeline. The creator of the coin, Billy Markus, addressed the constant changes in the value of the coin and a lot of it has to do with the nature of the beast.
“Why does $DOGE fall? Same reason as why $DOGE rises. Buying and selling. That’s it. The crypto space is ruled by emotion and sentiment. People buy and sell for their own reasons, and those decisions move the price. Always has been. Markets gonna market,” Markus said.
Over the past few days, the environmental impact of mining cryptocurrency was the next stop on the cryptocurrency rollercoaster. Musk tweeted that Tesla would stop receiving Bitcoin as a payment and highlighted the amount of electricity needed to mine crypto caused a lot of negative effects for the environment.
As a result, the value of several coins fell within hours. Several other vendors suspended the use of Bitcoin as a currency as well.
The unpredictability of the coin can leave the owner in a position that is uncomfortable. Every day, the latest updates and news surrounding crypto can move the value of the coin in either direction.
In spite of the many charts and analysts that attempt to predict the future of the coin, it remains impossible to predict the future of crypto. Entering the landscape while still in its infancy can be exhilarating with the ability to make both short- and long-term income.
Yet, the entire experience still holds a giant “buyer beware” sign. The ride may take people to the moon, but the ride is going to be bumpy and there is no safety net.
Photo courtesy of PANTHER MEDIA GMBH/ALAMY.