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Dogecoin, a “cryptocurrency,” has dominated the headlines for the majority of the first quarter due to its exponential increases.
Consider this: Prior to market corrections on April 20th, DOGE was up by 8,736 percent as compared to its value on January 1st. In reality, the altcoin rose nearly 500 percent in a seven-day period in mid-April alone.
Dogecoin currently has a market value of over $37 billion as a result of the same, with the currency ranking 8th on CoinMarketCap’s charts. Nonetheless, there is a lot of doubt about DOGE.
Why is this so? Since it has yet to come from the shadow of being a “meme coin.” Furthermore, Dogecoin has yet to break its stigma as a hoax coin of little utility, which is exacerbated by the absence of a core development team. It does, however, have Elon Musk and his hype-train.
Doge-ing the bubble
Needless to mention, this has sparked rumours that cryptocurrency is a bubble, a bubble that will soon burst and pop big. The same sentiment was expressed by prominent TV personality Jim Cramer in a recent blog post in which he mentioned existing market bubbles.
Cramer considers Dogecoin and NFTs to be the poles in what constitutes cryptocurrencies, with the former two far inside bubble territory. He mentioned,
“Dogecoin was meant as a joke and it is still a joke except a lot more people are on it.”
“I think a more serious market would be a betting market on the direction of Dogecoin because the currency’s action is more reminiscent of sports betting. Why not? To me it’s just a sport, so why not gamble on it.”
Cramer’s new remarks are, in several respects, an echo of those he made in a previous interview. During the same segment, though emphasising DOGE’s “joke” status, Cramer said, “Not all cryptos are created equal.”
CoinShares’ Meltem Demirors echoes something similar, with the exec claiming,
“It’s a classic sort of bubble, in my view. My firm does not produce analysis on Dogecoin for a reason. We don’t have a dogecoin in the market.”
Inside the bubble
There aren’t just broad remarks made by Cramer and Demirors. If you look closer, you’ll see that there’s a lot of evidence to back up these claims.
Consider this: according to estimates, the top 1% of Dogecoin addresses own 94% of the entire stock, while a single address controls 27% of all DOGE. Furthermore, as a recent article pointed out, the number of short-term holders (addresses carrying DOGE for less than a month) has increased from 165K in December to 582K in April.
As a result, the question is, why hasn’t the bubble popped yet? There may be no correct or single response, but consider the root of most of the hysteria – Elon Musk.
The Bubble makers
As previously said, the Tesla CEO has long taken to tweeting about DOGE, with some of his tweets triggering an industry-leading DOGE rally.
Musk, for example, has tweeted at least 25 times about Dogecoin since the beginning of the year, with each of them bordering on sh*tposting. Consider his most recent tweet –
SNL May 8
— Elon Musk (@elonmusk) April 28, 2021
Within 4 hours of the tweet’s publication, DOGE was up by almost 25% on the charts, hiking from $0.26 to $0.32.
This aren’t the organic or ecosystem-centric inventions that we frequently equate with asset-specific price increases. It is just what it seems to be.
Musk isn’t the only one. Mark Cuban, for example, has stated that Dogecoin has no inherent value. Despite this, he has not only purchased but also protected DOGE.
So, why is Musk hyping Dogecoin? According to what he said, he does not own DOGE, nor does Tesla. As a result, a pump and dump may be ruled out. However, if that is ruled out, no logical explanations emerge, with the exception of Musk using the “people’s crypto” to mock those who are investing in DOGE before its eventual collapse.
IF THAT IS THE CASE, it could fuel a pump and dump of a different kind, with serious consequences not just for the stability of the crypto-market, but also for its perception in the outside world. As a result, Dogecoin’s bubble will burst. The question is, when will it happen?