The price of the joke cryptocurrency Dogecoin spiked after Tesla and SpaceX CEO ELon Musk tweeted about it, leading to a 100% increase in the space of a week. The cryptocurrency that started as an internet joke in less than a week increased its value by 400 %.
Doge Barking at the Moon pic.twitter.com/QFB81D7zOL
— Elon Musk (@elonmusk) April 15, 2021
Dogecoin began as a mix between a meme and a cryptocurrency in 2013, created by developers Jackson Palmer and Billy Markus, to satirize the growing popularity of cryptocurrencies and memes.
Dogecoin’s market capitalization surpassed $ 49 billion, placing it as the fifth-largest cryptocurrency on the market. Since the Reddit rally around the GameStop stock, Dogecoin has experienced pronounced growths in demand, which some would describe as market euphoria.
Like some stocks in the stock market, Dogecoin has undergone a dizzying valuation product of the euphoria on networks, especially Twitter and Reddit. This is not the first time Elon Musk has caused a spike in the price of the cryptocurrency.
In March, billionaire Mark Cuban announced that the Dallas Mavericks would begin accepting Dogecoin for the purchase of Mavericks merchandise. The purchase of Dogecoin grew by 550 % after Mark Cuban’s announcement.
As the Reddit forum managed to pressure Gamestop’s stock price higher at the time, a new forum on Reddit emerges among financial technology geeks, r/satoshistreetbets, a forum that, along with Elon Musk, was one of those responsible for driving the Dogecoin euphoria this week.
Next responsible for the Dogecoin boom may have been the government itself, with its $1,400 a month stimulus plan for every young adult earning less than $75,000 a year. According to one study, about 10% of Americans planned to invest some of the money from the stimulus checks in Bitcoin or other cryptocurrencies.
The market may also have gained confidence in cryptocurrencies by the incorporation of Coinbase, the largest cryptocurrency exchange, on Wall Street. The crypto exchange was listed on the Nasdaq technology financial index, with an initial public offering of $ 250 a share, pushing the company past the $ 100 billion valuation.
Despite the boom for Dogecoin and cryptocurrencies in general, some skeptics warn of a dangerous bubble, which could cost the savings of thousands of euphoric investors. The main fear of the market is the growing inflationary pressures felt in the economy, both on the consumer and producer side.
Congressional and government stimulus plans, along with the FED‘s easy money policy, while boosting demand, have also put upward pressure on prices. While the inflation currently being experienced by the economy does not seem to be a problem for the Fed, for some analysts, low-interest rates and the huge amount of money being issued may be inflating the financial markets, especially cryptocurrencies.