A comprehensive review of how Dogecoin rose 400 times

April 20th is Dogecoin’s anniversary. The Wall Street Journal published a report on Dogecoin on its front page, titled “Dogecoin Trading Catches Up with Online Frenzy”, which mentioned that Dogecoin’s return rate in 2021 exceeded 8,100%, more than twice the increase in the S&P 500 since 1998. The market value of Dogecoin is about $50 billion, surpassing Marriott International and Ford Motor.

Dogecoin opened at $0.004619 per coin on January 1, 2021, and reached a high of $0.47 per coin on April 16, 2021, a 200% intraday increase. The price has soared more than 100 times this year in just 106 days. Since the lowest price of $0.001158 on March 12, 2020, the highest increase has exceeded 400 times.

Some people believe that the rise of Dogecoin reflects the power of collective belief and the desire for a more ideal form of cryptocurrency, which indicates that decentralization will flourish. However, behind the 400-fold surge of Dogecoin is actually the promotion of celebrities, the carnival of retail investors, and the foolish mentality of leeks. The bubble of Dogecoin will eventually burst.

Doge's past and present

Dogecoin is a unique existence in the cryptocurrency circle. In December 2013, Billy Markus, an American IBM software engineer, and Jackson Palmer, an Australian Adobe engineer, jointly created Dogecoin based on the Bitcoin code.

Ironically, the two engineers launched Dogecoin to mock Bitcoin. In 2013, the price of Bitcoin rose rapidly, from worthless to dozens of dollars.

If Bitcoin is a rebellion against the traditional financial system, Dogecoin is a rebellion against Bitcoin. It eliminates one of the main characteristics of Bitcoin - the total amount is fixed and cannot be over-issued. Under Palmer and Marcus's modification of Bitcoin rules, the issuance of Dogecoin in the first year was 100 billion, and it has increased by 5% almost every year since then. At present, the total amount of Dogecoin has reached nearly 130 billion, which is 6,000 times that of Bitcoin.

To further mock him, Palmer also bought Dogecion.com to match bitcoin.com, the official website of Bitcoin. Markus named his Twitter account shibetoshi Nakaoto, which was used to mock Satoshi Nakamoto, the founder of Bitcoin.

"We think it's a big joke that's doomed to die," Palmer laughed in an interview with CNET in February.

As early as April 2019, Palmer cleared the content posted on his Twitter account and the videos on YouTube and disappeared from the Internet. The market value of Dogecoin has been ranked behind 200 in the seven years since its birth.

In 2021, Dogecoin suddenly became popular, and it was extremely popular. According to the statistics of Dogecoin prices, Dogecoin opened at $0.004619 per coin on January 1, 2021, and the highest price reached $0.47 per coin on April 16, 2021, a 200% increase in the day. The price has soared more than 100 times this year, taking only 106 days. Since the lowest price of $0.001158 on March 12, 2020, the highest increase has exceeded 400 times.

Retail investors and Musk

At present, it seems that there are two main driving forces behind Dogecoin's "out-of-circle" behavior: one is the American retail investors gathered in the WSB community under the social media platform Reddit; the other is Tesla founder Elon Musk.

Today, in January, the U.S. stock market staged the largest "retail investors vs. institutions" battle in history, namely the battle to defend GME (GameStop).

WallStreetBets (WSB for short) retail investors collectively pushed the $18 game retailer stock GME to $483, exploding a large number of short-selling institutions on Wall Street and causing uproar in the global financial market.

Soon after, WSB's enthusiasm for the stock market spread to Dogecoin. On January 28, Twitter user "WSBChairman" asked his 750,000 followers, "Has Dogecoin ever reached $1?" Reddit users responded, calling on everyone to buy Dogecoin like buying GME stocks, hold the coins and not sell them, with the goal of "1 Dogecoin = $1". Subsequently, Dogecoin experienced a huge price rebound, rising from a low of $0.01 to a peak of $0.087.

The price of Dogecoin has skyrocketed, and Tesla CEO Musk's "selling" has also contributed greatly. On February 4 this year, Musk suddenly tweeted "Doge", and the price of Dogecoin quickly rose by 50%. He then posted a number of tweets related to Dogecoin: "We don't need to be billionaires to own Dogecoin, Dogecoin is the people's digital currency." "I'm not drunk, nor am I depressed, I only have Dogecoin in my mind." "Dogecoin is the most interesting cryptocurrency in the world."

Musk's support for Dogecoin can be traced back to April 2019, when the official Dogecoin account launched a vote on Twitter to select the CEO of Dogecoin, and Musk was elected with a high vote. Subsequently, Musk tweeted that Dogecoin is his favorite digital currency and changed his Twitter account information to "Former CEO of Dogecoin."

In early April, Musk tweeted that he would use SpaceX to bring a Dogecoin to the moon. As soon as the news came out, Dogecoin soared, rising 15% that day.

Two weeks later, Coinbase, the largest cryptocurrency exchange in the United States, was directly listed on the Nasdaq exchange, becoming the first cryptocurrency platform in the United States. The successful listing of Coinbase led to a collective rise in cryptocurrencies, among which Dogecoin soared by nearly 30%.

The next day, Musk tweeted that Dogecoin barked at the moon and attached relevant pictures. Dogecoin immediately soared, rising 50% that day. On April 16, Dogecoin continued to soar, with an increase of 250% in 24 hours, reaching a high of $0.47 per coin, and its total market value once exceeded $60 billion.

Amid the sharp rise, more and more businesses have expressed their willingness to accept or consider accepting Dogecoin payments. The NBA team Dallas Mavericks began accepting Dogecoin payments on March 4, and fans can use Dogecoin to purchase game tickets and team merchandise. On March 7, the team's owner Mark Cuban tweeted: "The Dallas Mavericks have completed more than 20,000 Dogecoin transactions, making us the world's largest Dogecoin merchant." On April 15, Mark Cuban tweeted again that the Mavericks will permanently hold Dogecoin on their balance sheet. At present, the sales of Dogecoin used to purchase team merchandise have exceeded 122,000.

It can be seen that Dogecoin has a solid community foundation in the United States. After it quickly gained popularity with a more than 400-fold increase in price, it continues to gain support from more merchants.

On March 30, Meten International Education Group (METX.US) announced that the company has launched a blockchain technology strategic plan and will introduce a Dogecoin reward mechanism for foreign teachers on the platform. Students can reward teachers based on their teaching performance, and teachers can also earn Dogecoin by performing teaching and research tasks posted on the company's platform. In addition, students can also earn Dogecoin by completing their studies and sharing knowledge on the platform.

On April 19, the official Twitter account of Snickers chocolate bars posted a tweet with the hashtag #DogeDay, which included a Dogecoin-themed packaging image. Snickers is also preparing to launch a limited edition Snickers chocolate bar for Dogecoin investors, saying it was just a "cool GIF."

On April 20, Dogecoin celebrated its anniversary, and good news continued. On that day, the well-known online retailer Newegg announced that it would accept Dogecoin as an official payment method. Andrew Choi, senior brand manager at Newegg, said: "We are committed to simplifying the shopping process for our customers and strive to provide them with the most suitable shopping methods for them, so that they can choose the payment method that best suits them to complete the transaction. To this end, we are happy to provide fans who hold Dogecoin with a convenient way to buy online."

Milky Way posted a message on Twitter about Dogecoin and chocolate bars, and changed the "To the Moon" commonly said in the crypto industry to "To the Milky Way." In addition, more than 130,000 people signed a petition on Change.org calling on Amazon to accept Dogecoin as a payment method.

On the same day, American rap star Snoop Dogg and Shiba-Inu (the dog in the original Doge emoticon) released a music video titled "Snoop Dogg 420 DogeCoin Video" on YouTube. The singer also tweeted Musk, the biggest promoter of Dogecoin, to congratulate him on participating in "Doge Day" on April 20.

The bubble will eventually burst

Public data shows that the cumulative increase of Dogecoin has reached 7,000% this year. On April 21, Nic Carter, co-founder of Coin Metrics, tweeted that in the past week, 872 million Dogecoins (equivalent to $287 million) that had not been moved for more than five years had re-entered circulation.

This data shows that large investors began to sell at high prices, and the story of cutting leeks began to unfold. Since reaching a record high of $0.47, the price of Dogecoin has been falling all the way, and on April 26 it was about $0.27, a drop of 42.6% from the record high.

The ups and downs of Dogecoin have caused doubts among many senior people in the cryptocurrency industry, who believe that its bubble is too big and has been overhyped. They warned investors not to bet everything on Dogecoin, fearing that a few large holders control most of the supply of Dogecoin.

In fact, Dogecoin chips are very concentrated, with nearly 70% of Dogecoin distributed in about 100 wallets around the world, the largest of which controls about 30% of Dogecoin.

David Kimberley, an analyst at Freetrade, a British investment app, believes that the rise of Dogecoin is a classic example of the greater fool theory of economics. People buy Dogecoin not because they think it has any meaning or value, but because they hope that others will rush in and push up the price, and then they can take the opportunity to sell and make a quick fortune. "When everyone does this, the bubble will eventually burst, and if you don't exit in time, you will lose money."

"Due to Musk's efforts to promote the product and whales' manipulation of the market, the price of Dogecoin has become very high. This is a bubble. The rise of Dogecoin is unsustainable. It will collapse and a large amount of retail funds will be lost soon." Charles Hoskinson, founder of Cardano, believes that after the bubble bursts, Dogecoin will become a catalyst for regulators and legislators to intervene in the crypto industry, which is not a good thing. "Dogecoin has no stable development team and no original technology. After the inevitable bubble bursts, Congress will launch an investigation, the US SEC will run around, and various regulatory agencies will say everywhere: This proves that cryptocurrencies cannot control themselves, and we need to come in to save you."

According to data from the coinmarketcap website, there are still 2,109 digital currencies traded on exchanges around the world, of which a considerable number are "developed" by a certain company. They have the power of major shareholders behind them, which violates the "decentralized" concept of blockchain.

Raoul Pal, founder and CEO of Real Vision, recently revealed his portfolio of crypto assets. "I currently have 50% Bitcoin, 30% Ethereum, and 20% other tokens. I try to keep a balance in the entire crypto field because I really don't know which coins will win and which will not win in this field." Regarding the recently popular Dogecoin, Pal said: "Will it last forever? Who knows? But I bought some Dogecoin because people are pouring in."

Retail investors who hold Dogecoin may all have the same "leek" mentality, but has there ever been a story in history where leeks escaped being harvested?