Apr 20, 2021

So price? Much crypto?

Dogecoin is one of the hottest cryptocurrencies of 2021 - investing 100$ on January 1st would have returned almost 9000$ today. Is it the blaze of a new champion or a shooting star just passing on the horizon?

It is very hard to set any kind of limit or prediction for Dogecoin due to the untraditional factors driving it price. For other coins you have factors like utility, future potential, listings on major exchanges or securing key partners. Doge's drivers are celebrity tweets, the emotions of its fanbase and speculators joining rallies.

To say Doge is looked down upon by crypto purists is to say nothing at all. However at this point in time it has become an accepted part of crypto folklore. Even though it's the world's fourth largest crypto by market cap today it is forever on the sidelines, away from any kind of mainstream crypto visions and discussions.

There are two big reasons for that. For one, Dogecoin has no real special utility and almost no developers working on it. It was created as a spin off of Litecoin and has stayed basically the same since. Whereas many other coins promise users to fulfil purposes no other coin can fulfil, Doge is a copy of an outdated technology. Anything you can do with Doge, you can do with other coins much better. Secondly Doge is highly centralized. A small number of wallets holds over 50% of its total market cap. The identity of the holders is unknown. It means basicaly someone owns the market for the coin and steer it according to her or his needs. Such centralization is a very basic turn off in the decentralized crypto world.

So where does this leave us? In today's bull market Doge can reach unfathomable heights, pushed by its fanbase and Elon Musk's tweets. It is no small coincidence the coin's recent rally correlated with the WallStreetBets community including it in their price / pump discussions. Beyond its meme appeals Doge's limited utility makes it a perfect specimen for pump and dump activities.

However it remains to be seen how its followers react when market conditions get more dire. Past crypto market crashes happened when retail traders overreacted to negative market events. The nature of Doge and its owners means its volatility might be a knife which will cut both ways. For now, Doge remains the cheerful and friendly face of cryptocurrency. Mark Cuban bought his son a few dollars' worth to teach him about crypto. Perhaps this is the one purpose for which Doge is the absolute best in class.