The meme-inspired cryptocurrency was trading above $0.60 on Thursday, putting its market cap at $78bn – $4bn more than the estimated valuation of Elon Musk’s privately held rocket company, according to recent SEC filings.
The remarkable gains have been partly spurred on by the technology billionaire, who has frequently promoted dogecoin via Twitter. Last week, Mr Musk hinted that he would make reference to the cryptocurrency during his upcoming appearance on Saturday Night Live, tweeting: “The Dogefather SNL May 8”.
Dogecoin’s latest record price rally has seen its value increase by more than 30,000 per cent since this time last year, despite some crypto experts claiming that its underlying technology and overall utility is second-rate compared to other cryptocurrencies like bitcoin or ethereum.
“On face value, it is a complete mystery as to why dogecoin continues to grow: it is a meme coin, with bad tokenomics and no development,” Antony Portno, founder of cryptocurrency information site Traders of Crypto, told The Independent.
“We all know the world of crypto is in equal measure crazy and fickle. Social media has been the key contributor to the growth of dogecoin... it has become an anti-establishment rebel coin.”
In its monthly market report published on Wednesday, cryptocurrency exchange Kraken attributed dogecoin’s new-found popularity to the culture of “meme stocks” driven by online forums of retail investors on sites like Reddit.
“Dogecoin is, after all, the original ‘meme asset’,” the report stated. “This is an extension of the value that cryptocurrencies derive from vibrant and growing communities that give rise to network effects.”
Within the popular r/dogecoin sub-Reddit, users urged dogecoin investors not to sell, even if it rose above $1 in price.
Many fear that a mass sell-off at this point could cause a spectacular price crash similar to the one seen in 2018, when dogecoin’s price fell by more than 80 per cent.
Despite its volatility, some analysts remain bullish about dogecoin’s price potential in 2021.
“We see a greater likelihood that dogecoin will reach the $1-mark in the coming days, with probability rising for DOGE to rally to as high as $5 later in 2021 amid soaring social media interest,” said Jesse Cohen, senior analyst at uk.Investing.com.
“Dogecoin mania has shown once again the power of the retail crowd. Growing acceptance by retail traders and mounting support from high-profile billionaires will continue to add to the legitimacy of the meme cryptocurrency.”
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