Will "DogeDay" allow the dogecoin cryptocurrency to continue its stunning rise?
For several days now, dogecoin, the cryptocurrency based on blockchain technology has been the talk of the town. Originally a joke started by an American entrepreneur in 2013, the community wants April 20 to become "DogeDay" after the completely implausible results of this last week. The cryptocurrency has risen more than 414% according to coinmarketcap.
All outstanding dogecoins are now worth over $50 billion. Fans themselves declared April 20 "DogeDay" on social media in an effort to push the value of the digital currency to new heights. On April 12, dogecoin was worth 0.0707 cents per unit. By 3 p.m. on April 20, dogecoin was at 0.3965 cents. Its all-time high of 45 cents had been reached on Friday. So how to explain such a craze for a currency yet almost useless? This crypto-currency has little use in the real world outside of a few niche markets, including tipping artists online or providing support to a contributor on Reddit.
The adoption of cryptocurrencies by corporations and other public investors is partly what allows dogecoin to become popular. Yet the most critical factor in this power grab remains a tweet. A single tweet from Elon Musk on April 15, 2021 stating, "Doge Barking at the moon" created this unlikely movement. From then on the community and investors took over. On Twitter and Reddit, cryptocurrency enthusiasts posted memes featuring the currency's logo, a Shiba Indu dog, with the hashtags #DogeDay and #Doge420. The strength of this cryptocurrency is also its community. Their goal is to reach at least 0.69 cents to pay tribute to their meme community. With this unthinkable financial movement, dogecoin is currently the fifth most valuable cryptocurrency in the world.
Doge Barking at the Moon pic.twitter.com/QFB81D7zOL
- Elon Musk (@elonmusk) April 15, 2021
A special cryptocurrency
Yet on social media, a large community of experts is warning would-be investors. Unlike most crypto-currencies, dogecoin does not limit its maximum number of coins, it can produce an unlimited number making it an inflationary currency. As a counterexample, bitcoin has set the amount of digital currency available at 21 million, dogecoin is already at 129 billion coins in circulation and has no plans to stop there.
In a LinkedIn post, Akand Sitra, an analyst at a cryptocurrency risk management firm, expressed his concerns. "This is a scam, a rip-off (...) a stain on the entire crypto industry" can be found on a LinkedIn post. He continues his argument by using one of the advantages of the blockchain, being able to take into account all transactions and thus get a global view. We learn from the chart (available here) that one investor alone holds 28% of all dogecoins, a sale value currently estimated at... $10 billion. The anonymous nature of cryptocurrencies makes it impossible to know whether this is a portfolio manager or a single person. Globally, 65% of the dogecoins in circulation are controlled by 98 people.
The TRMLabs analyst fears that big investors will sell off en masse after enjoying the dramatic rise. "The dogecoin bubble will burst by the end of the year, easily," Akand Sitra thus predicted. The question now remains what will happen, we can imagine the price suffering a backlash after its excellent results or will it continue to catch up with bitcoin by becoming the people's cryptocurrency. Case to follow very soon.
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