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The Dogecoin Bubble May Have Finally Burst

By Crypto BriefingCryptocurrencyJun 23, 2021 12:07AM ET
www.investing.com/analysis/the-dogecoin-bubble-may-have-finally-burst-200587709
The Dogecoin Bubble May Have Finally Burst
By Crypto Briefing   |  Jun 23, 2021 12:07AM ET
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Dogecoin's massive bubble has finally popped, with the path to higher prices looking murky.

Key Takeaways

  • Dogecoin started the year at $0.004, and the price grew to $0.74, an astounding return of 18500%.
  • The prevailing market conditions are incredibly risky for holders of meme projects like Dogecoin.
  • Within a month, the price has crashed by more than 70% in what appears to be a bubble burst.

Amid Bitcoin’s ongoing correction, Dogecoin is crashing at a far quicker pace in what looks like a bubble that has burst at last.

Demise Of Dogecoin

China’s recent restrictions on Bitcoin mining has caused turmoil in the market. Since last month, the overall crypto market has lost almost half its value, coming down from $2.5 trillion to at time of writing, $1.3 trillion.

The prevailing market conditions may even be worse for holders of popular meme projects that are perceived to be of no value other than their comical nature. Let’s look at the father of all meme coins, Dogecoin, which is losing its billions in market capitalization each week.

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Dogecoin started the year at $0.004, and the price climbed as high as $0.74 per coin on May 8, an astounding return of 18500%. In other words, if you had invested $1,000 in Dogecoin on Jan. 1, it would have turned into $185,000.

But the Dogecoin bubble finally seems to have popped. Since May 8, the price has crashed by more than 70% and is currently trading at $0.18, as per CoinGecko.

According to many financial analysts, Dogecoin’s ascent was driven by hype and support from tech billionaire and CEO of Tesla Motors (NASDAQ:TSLA) Elon Musk. Musk, who is considered by many a tech thought leader expressed admiration for the meme coin with his 57 million followers.

This was the catalyst for the 2021 Dogecoin mania that followed.

The coin also received endorsement from rock musician Gene Simmons, rapper SnoopDogg, and hundreds of social media influencers, all of which further boosted its popularity among novice investors.

Amid this growing traction, WallStreetBets, a well-known subreddit dedicated to investors, hopped onto the Dogecoin bandwagon. This caused a crowd pump campaign, a collaborative effort to elevate Dogecoin’s price similar to the orchestrated pump of GameStop (NYSE:GME) stock earlier this year.

Downward Momentum

On May 8, Dogecoin attained its all-time high price of $0.74, the the very same day when Musk promoted it during his SNL appearance.

DOGECOIN 4-Hr Chart
DOGECOIN 4-Hr Chart

Currently, the coin continues downward movement within a clear descending triangle and changing hands far below its 200 day simple moving average (see chart above). If the decline picks up, the coin may well be heading towards its long time critical level around ~$0.08.

DOGE’s supporters are optimistic about the project’s perceived utility in payments, as well lower transaction fees, in comparison to Bitcoin and Ethereum. In fact, sports teams like the NBA’s Dallas Mavericks and MLB’s Oakland Athletics already accept dogecoin payments for tickets to their games.

Despite the massive decline in Dogecoin since its May peak, the cryptocurrency is still up more than 4500% year-to-date.

DOGE’s current market capitalization is ~$23 billion which places it in the top 10 coins. It is ranked ahead of crypto projects such as Chainlink, Solana, and Polygon, despite the greater utility offered by these projects in the decentralized application space. For a project that launched as a joke, Dogecoin has accomplished great feats.

However, it is evident that celebrity endorsements, coupled with a crowd-led pump, was the prime catalyst for the rise in DOGE price. As a result, unless the coin gets more celebrities and influencers to promote itself, the road to higher price points looks murky at best.

Original Post

The Dogecoin Bubble May Have Finally Burst
 

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The Dogecoin Bubble May Have Finally Burst

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Comments (4)
Steves View
Steves View Jul 01, 2021 7:49AM ET
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Right place wrong time.  The ideal is strong. International currency without corruption. However, we already have a method to pay abroad. Debit card, Credit card. Let us bring back metal standards.
evette anderson
evette anderson Jun 24, 2021 10:48PM ET
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it principle
Johnny Crash
Johnny Crash Jun 24, 2021 12:50AM ET
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Doge started as a joke, was a real joke and still is a joke. Steer clear of this scam
Chris Johnson
Chris Johnson Jun 24, 2021 12:50AM ET
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But many hodlers are in denial still...
sahil nagrani
sahil nagrani Jun 23, 2021 11:08AM ET
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Short then!
 
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