Why is everyone talking about the “Dogecoin”, is it possible to make money on it, and is it true that soon everyone will forget about it? Let’s try to figure it out
MUCH START VERY WOW: PROGRAMMER JOKE
Dogecoin (DOGE) was originally a joke – too many (as it seemed then!) altcoins were launched in 2013. The software developer Jackson Palmer created his own coin, named after the meme about the “funny Shiba dog”, better known as Doge. Well, this meme is still alive, although its aesthetic canons have long changed. Enviable longevity!
Surprisingly, the once comic currency can now boast exactly the same longevity. Moreover, it not only stayed at the bottom, but every now and then was honored with its ups and downs. True, the first of them was still a consequence of the crypto market conjuncture, talking about 2017 and 2018. As expected, DOGE followed BTC not only up but also down. Until recently, it had only one completely “own” achievement – the growth of the exchange rate in September of the same 2018. It was connected with the news about the test of the technological “bridge” between DOGE and Ethereum, and turned out to be short-lived. In general, it did not amaze the imagination with unbridled growth. However, things are quite different with the recent take-off – it was caused by a real financial war.
THE TWISTED HAND OF THE MARKET
Briefly: a group of users of the Reddit website (/r/ WallStreetBets) realized that they could buy shares of companies, against which “bears” are trading short. The first such target was Gamestop. Thanks to the efforts of individual bloggers, this movement has spread widely enough to start a kind of chain reaction. As a result, the price of Gamestop shares skyrocketed, hedge funds were already on the verge of bankruptcy, and government regulations are already proposing to save the market from “raids”. Among the winners were other companies – for example, the AMC cinema, which was on the verge of bankruptcy, and was literally saved by this mess.
Users started looking for new assets to artificially raise prices. One of the unifying groups of “enthusiasts” was the cryptocurrency-focused subreddit /r/ SatoshiStreetBets, where the idea of promoting Dogecoin was born. It was supported by the “WSB Chairman” Twitter, which is the unofficial mouthpiece of the main movement.
A certain role was played by the fact that it was possible to buy Dogecoin using the Robinhood application – the company that issued it was also involved in the Internet’s “war” against hedge funds. And of course, it was not without the ubiquitous Elon Musk. He, being a longtime fan of memes in general and DOGE in particular, has almost directly expressed support for this initiative.
However, it was not only about network trolls and anarchists. Many users and even institutions, taught by the example of Gamestop, began to participate in the movement for their own benefit. And when numerous Chinese investors entered the business, the flywheel spun to the full.
ONE FLEW OVER THE DOGE’S NEST
In just a day, Dogecoin acquired more than 7 bln in cap. The price started from $0.0038 per coin on December 24 and $0.0083 on January 28, and in the morning of the 29th, DOGE reached $0.07. The hottest heads began to talk about the price of $1 per coin – which, however, did not seem likely even then. This was followed by a correction. However, it did not turn into a runaway fall, at the time of writing the article, the rate was $0.037 and entered a new wave of growth, again reaching $0.07.
The problem is that the analogy with Gamestop and WallStreetBets, despite all the intersections in names, times and people, is not entirely correct. There are no stock market conventions and restrictions on the crypto market that would allow exactly repeating this scheme. And the movement in support of Dogecoin, no matter how sad it is to admit it, is another, quite typical Pump and Dump scheme, the key stages of which are almost unmistakably recognizable: capitalization growth through celebrities and flash mobs, excitement and the inevitable dumping of coins, followed by a collapse.
Speaking of celebrities, new celebrities have already joined the DOGE hype: KISS musician Gene Simmons and notorious rapper Snoop Dogg, who even temporarily changed his nickname to Snoop Doge, thus deciding to support the coin. The cryptocurrency market has seen the implementation of this scheme many times – suffice it to recall the activities of Mr. McAfee, who, by the way, was arrested and charged.
The conclusion suggests itself that playing “for a long time” on DOGE is probably not worth it. Surely this coin will continue to exist, following the market conjuncture and experiencing its own ups and downs. But now its path clearly does not lead to the moon, but in the opposite direction… The forums are already filled with stories of those who decided to jump on the Dogecoin hype train and squandered their capital on one of the sharp corrections.
Another thing is other cryptocurrencies that can fall under the “pump”. A lot of users are now frantically trying to figure out or just guess the new lucky coin: will there be a new Ripple pump? Tron? Something else? Some of them will guess and get rich, the rest will be left with a load of useless virtual tokens. So far, little has changed in this area.