Dogecoin has had an impressive bull run over the past few years. In 5 years, the price of the coin has increased by more than 100,000% against the US dollar. From November 2017 to May of this year, the coin has grown by more than 124,000%.
In contrast, gold is up over 40% in the same period while Bitcoin is up around 8,000%. This makes Dogecoin one of the best performing assets of the past half decade. So is it too late to buy Dogecoin?
What is Dogecoin?
Dogecoin is a meme coin started in 2014 by Jackson Palmer and “Shibetoshi Nakamoto”. This coin was started as a joke with the goal of being an alternative to Bitcoin and Litecoin. Like BTC,
Dogecoin is a proof-of-work cryptocurrency that is mined using computers that solve complex mathematical calculations.
Dogecoin can be used as a peer-to-peer currency. This means that people can send it to each other in a relatively simple way.
The currency can also be used to shop where it is accepted. Because of its volatility, very few companies accept it as a means of payment. AMC, the largest movie theater company in the world, has hinted that they will start accepting Dogecoin.
Dogecoin’s popularity has put it on top of the cryptocurrency radar. Today, Dogecoin has a market capitalization of over $28 billion. This makes it the 10th largest cryptocurrency in the world. In other words, Dogecoin is more valuable than Southwest Airlines, Lazard, United Airlines and Box.
What is the future of Dogecoin?
Like most other cryptocurrencies, most people who own Dogecoin do so because of its investment potential. Most holders do not use it as a medium of exchange. Therefore, its future price action will mainly depend on the overall performance of other cryptocurrencies.
In my view, I expect that cryptocurrencies will perform relatively well in the coming years as they become the favorite investment choice of young people.
However, the biggest risk to the coin is its close association with Elon Musk. While he’s good for the coin, there’s also a chance he could change his mind. This, in turn, will push the coin lower.
Another risk is that most of the Dogecoin in circulation is held by a small group of people or institutions. This ownership could push its price lower if they decide to exit their trade. You can visit Time has no bank to learn about how to buy Dogecoin.
Why does DOGE increase
There are a number of reasons why the price of Dogecoin has skyrocketed over the past few years. First, this rally is mainly due to its correlation with other cryptocurrencies. A closer look shows that most digital currencies have surged in the past few months.
Indeed, the total market capitalization of all cryptocurrencies tracked by CoinGecko increased to nearly 3 trillion dollars. This makes it one of the largest asset classes in the world. It’s hard to see a cryptocurrency that hasn’t gone up in price over the past 5 years.
Second, like all cryptocurrencies, DOGE has performed well thanks to the easy monetary policies implemented by the Federal Reserve. In most cases, risky assets tend to perform well during periods of low rates.
Elon Musk and Dogecoin
Third, and most importantly, the coin has surged thanks to Elon Musk, founder and CEO of Tesla and SpaceX. Musk is the richest man in the world with total net worth over $310 Billion. According to Bloomberg, his net worth is $100 more than Jeff Bezos, the world’s second-richest person.
Elon Musk is admired by many young people, loving his achievements at a very young age. He has over 65 million followers on Twitter.
As a result, his endorsement of Dogecoin has had a major impact on the coin. In a previous tweet, he confirmed that he owns some coins. His tweets and comments have motivated many young people to buy the coin.
Apart from these, Dogecoin price has increased due to its popularity on social media platforms like Twitter and Reddit. Most importantly, it is one of the most popular coins in trading platforms like Robinhood and Cash App. It has become a popular way for people to earn money for hotels and other workers.
Dogecoin technical analysis
On the weekly chart, we see that DOGE price has been in a tight range for the past few weeks. The coin is trading at the same level as the 50-day and 25-day moving averages. It has also formed a bullish pennant pattern, which is usually a positive sign.
Additionally, it struggled to move below the critical support of $0.1600. Therefore, it is likely that the coin will have a breakout in the uptrend in the coming weeks. If this happens, the next important level to watch would be $0.72, the all-time high.
