Dogecoin worthless by code? DOGE investors bracket out this figure
The insane Dogecoin rally has investors dreaming of making a quick buck. But beware: the DOGE bubble has been identified.
There is no way around Dogecoin at the moment. For almost two weeks, the DOGE price has been stirring up the crypto market and conquering one record high after another. Only on Monday, 8 February, the rally sent Dogecoin to a new all-time high of 0.083 US dollars. The meme coin with the Shiba Inu emblem has worked its way into the top ten Crypto Profit cryptocurrencies, the market capitalisation has already exceeded the 10 billion US dollar mark and the DOGE price is aiming for the 10 cent mark. But even if the figures are cause for euphoria, one figure clouds the optimism.
Dogecoin worthless by code?
128 billion: That’s the amount of Dogecoin in circulation to date. The fact that the market capitalisation is spread over a high supply may not be an investment exclusion criterion at first. However, from an investor’s point of view, the non-existent upper limit is a cause for concern. Since Dogecoin co-developer Jackson Palmer lifted a supply limit in 2014, the amount in circulation has been growing constantly. Almost 5 billion coins flow into the DOGE supply annually, diluting the market capitalisation.
Investors who hope that the Dogecoin hype will lead to a Bitcoin-like price level will be proven wrong by the constant Doge inflation alone. As a BTC parody, Dogecoin stands in fundamental contrast to the original. Bitcoin Supply is limited to 21 million units. Dogecoin, on the other hand, was never designed as a store of value, quite the opposite. Dogecoin ironically demonstrates the laws of the market. Except for a few use cases and some PR stunts like sponsoring the Jamaican bobsleigh team at the 2014 Winter Olympics, Dogecoin remains limited to its status as a fun coin – Dogecoin has no intrinsic value.
However, this is not currently stopping investors from transferring substantial sums into the cryptocurrency. As recently as 27 January, the market capitalisation was less than one billion US dollars. In the wake of the Wallstreetbets erosion, a momentum has been set in motion on social channels in no time at all, flooding 9 billion US dollars into Dogecoin in less than two weeks.
Moreover, the doge rally is largely the product of Tesla CEO Elon Musk, who provides the waiting doge community with doge tweets at a regular pace. In Gene Simmons and Snoop Dogg, the e-car pioneer has also found two celebrity supporters to reignite the rallying blood.
Bubble formation with a fall
This momentum may now be blinding some investors. The fact that younger investors in particular are also getting excited about a Dogecoin investment, as was shown during the Tik Tok Challenge last year, puts the role of Musk and Co. in a somewhat different light in this regard. During a recent Clubhouse appearance, Musk was still saying:
Dogecoin was made as a joke to make fun of cryptocurrencies. […] Dogecoin loves irony. […] Probably the most entertaining outcome and the most ironic outcome would be that Dogecoin becomes the currency of the earth in the future.
However, a less entertaining, though equally ironic, outcome would be the total loss of thousands of small investors. By persistently inflating the hype, Musk is creating an ever-increasing drop. The impact could cost some private investors dearly in widespread profit-taking. So whether Musk plays a laudable role in the doge explosion is doubtful – as much as the community hopes for him as a crypto figurehead.