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Dogecoin spikes 300% in a week, stoking fears of a cryptocurrency bubble

Dogecoin began a joke. Now it’s a $34 billion digital top-10 currency.

The cryptocurrency is built on the “Doge” meme, which became famous in late 2013. A Shiba Inu dog is portrayed alongside nonsensical phrases in multicolored, Comic Sans-font text.

Created by software engineers Billy Markus and Jackson Palmer in 2013, dogecoin was intended as a quicker, yet “fun” alternative to bitcoin. It has since found online a growing culture.

Dogecoin spikes 300% in a week, stoking fears of a cryptocurrency bubble -  YouTube

And now, defying all expectations, Dogecoin’s total market cap is $34 billion, according to CoinGecko’s crypto-market data blog, adding in $19.9 billion in the last 24 hours. Friday morning, the digital token hit an all-time high above 28 cents, more than doubling from a day ago.

‘I became a millionaire Dogecoin’

This is not dogecoin’s first wild rise. Like many cryptocurrencies, prices appear to have wild swings. Dogecoin began mounting a comeback earlier this year, skyrocketing behind enthusiasm from a Reddit forum named SatoshiStreetBets.

SatoshiStreetBets aims to increase cryptocurrency prices in the same way that the subreddit WallStreetBets helped drive a rally in GameStop shares in early 2021.

Dogecoin climbed again last week, reaching Wednesday for the first time at 10 cents a coin. In the last seven days, it’s risen by a whopping 300%.

On Friday, a Reddit user shared a screenshot of their dogecoin holdings on Robinhood’s investment app.

“Hey, I just became a Dogecoin millionaire,” said the user, showing a balance of $1,081,441.29 in their account.

Why is there a Dogecoin rally?

For one, Coinbase’s listing. On Wednesday, the most well-known virtual currency exchange in the United States went public, reaching a market cap of $100 billion in a watershed moment for cryptocurrencies.

The hype surrounding Coinbase’s launch contributed to a spike in bitcoin and ether rates. Bitcoin reached a record high of over $64,000 on Thursday, while ether finished at $2,500 for the first time Friday morning. Dogecoin was no exception to these digital assets’ frenzied interest.

Dogecoin has drawn Robinhood’s followers. On Thursday, after facing “unprecedented demand,” the U.S. online brokerage said its crypto-trading feature had a “huge outage.” It’s back online now, Robinhood said.

Some news attributed the new dogecoin rally to support of Tesla CEO Elon Musk’s meme-based token. Musk frequently tweeted about dogecoin, which boosted its value.

Musk posted a cryptic tweet “Doge Barking at the Moon” on Thursday, probably referring to the famous crypto slang term “to the moon.”

Dogecoin is the billionaire’s “favorite” cryptocurrency and “people’s crypto.”Musk emerged as a bitcoin supporter with his electric car company earlier this year, buying a $1.5 billion cryptocurrency.

His tweets, however, frightened some investors due to their obvious ability to move stocks. Some bitcoin investors, for example, expressed concern about Musk’s dogecoin tweets. Nick Carter, the co-founder of Castle Island Ventures, warned retail investors “would lose money on dogecoin,” calling it a “speculative vehicle.”

Bubble worries

Dogecoin’s skyrocketing price has contributed to concerns about a possible cryptocurrency market bubble. Some investors already see bitcoin as a speculative bubble—the world’s most common digital coin has more than doubled since 2021.

Dogecoin’s rise is a classic example of a more foolish theory at hand,” David Kimberley, a U.K. investment software Freetrade analyst, told CNBC.

Dogecoin spikes 300% in a week, stoking fears of a cryptocurrency bubble -  thenewwatcher

“People buy the cryptocurrency, not because they think it has any meaningful value, but because they expect others to pile in, drive up the price, and then they can sell off and make a fast buck.”

But, Kimberley said, “If someone does this, the bubble will inevitably break and you’ll be left short-changed if you don’t get out in time. And it’s almost hard to tell when that’ll happen. “

“This is doubly the case in crypto markets where a small group of players often possess a huge chunk of the total number of circulating ‘coins.’ That means that it only takes one person to lose all of their holdings in the market.


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