Why is Dogecoin Going Up Right Now?

why is dogecoin going up

The price of the cryptocurrency Dogecoin has fluctuated a lot over the past few months. So what is going on with Dogecoin price recently?

Retail investors are constantly trying to predict which cryptocurrency is a solid investment by using market data and trends but very few cryptocurrencies see steady price increases.

In June of 2021, Dogecoin was added to Coinbase.

In August of 2021, the Dogecoin Foundation reformed a board of advisors to determine the future of Dogecoin. In October, the price of doge also grew as Bitcoin soared past $60,000

Why is Dogecoin Going up in 2021?

Mainly, the recent Dogecoin price increases have been due to speculation from retail investors.

Due to the hype around Dogecoin and FOMO from other cryptocurrencies, people are buying the coin with the hopes it could 5x, 10x or even 100x their investment.

This causes competition. The cryptocurrency Shiba Inu (SHIB) is trying to become an Ethereum-based alternative to Dogecoin and was added to Coinbase in October 2021.

All of this makes prices fluctuate...

However some people suspect that Dogecoin (DOGE) is risky and only trending because of it's popularity.

Yet, this makes some people rally behind it more as a memecoin and argue that it is actually a stable and worthwhile investment.

why is dogecoin going up

What is Dogecoin?

On the face of it, Dogecoin is nothing more than a “copycat” blockchain project. You only need to look at its name to see the general positioning of this project. It was named after the famous Shiba Inu “Doge” meme, which was all the rage when Dogecoin was released.

It does run on its own blockchain technology, but it’s not completely original. People who analyzed the code of Dogecoin’s blockchain software noticed that it's actually based on another blockchain powering Litecoin.

In terms of processing time and transaction security issues, Dogecoin is also run by software that is arguably one of the oldest currently in operation.

Put simply: the code powering Dogecoin is not very secure, isn't bound by smart contracts, and doesn’t have much to distinguish it from larger and better-known blockchains like Ethereum and Bitcoin.

Just by looking at this list of disadvantages, you would think that Dogecoin wouldn't be worth much, and you would be absolutely correct. Up until fairly recently, Dogecoin’s price was a fraction of a penny.

A lot of this has to do with the fact that the way Dogecoin was coded, its software can continue to produce units infinitely. Just how much Dogecoin is currently out there?

Dogecoin growth in 2021

Well, as of May 2021, there were 129.5 billion Dogecoins in circulation. Please understand that this is a circulating supply, not a maximum cap.

Just by looking at that number, you can see why Bitcoin is worth close to 66,000 dollars per unit and Dogecoin is barely breaking past 30 US cents per unit.

The sad reality is that there is no theoretical supply limit for Dogecoins. People can continue to mine Dogecoins as much as they want and this will flood the market.

Unless Dogecoin’s developers come up with a compelling reason for people to use this crypto through smart contracts or blockchain-based applications, this coin will continue to remain a ‘memecoin’-a fad crypto.

Given the reasons above, it is not surprising why Dogecoin was flat on its back for so long. Anybody can mine this cryptocurrency. They just need to install the software and join the network of miners to process this crypto’s blockchain transactions.

Now that we’re clear as to why Dogecoin wasn't worth much for so long, this begs the question: why is Dogecoin going up? Why are so many people buying this cryptocurrency where there are so many other more solid and distinguished blockchain networks out there?

Is Dogecoin a Crypto bubble?

The reality behind crypto trading is that, for the most part, we are living through a “wild west” period for this global industry. It’s fairly easy to get into the market, and rules and regulations regarding promotions are murky at worst and non-existent at best.

This also means that new, lesser known cryptos often are effected by stablecoin price changes like Bitcoin, Litecoin, etc.

Given this situation, it’s not a surprise that a lot of people are buying all sorts of crypto with the hope that they will get ten times, 20 times, 200 times, or even 1,000 times their money back. You only need to go to Uniswap to see all these tokens being launched regularly to see the excitement and hype behind crypto speculation.

Just like with any bubble, when word gets out that there is a spike in value, new investors come in, which then fuels other speculators. It sets off a chain reaction often fueled by social media.

This is where the second reason for Dogecoin’s unexpected price explosion comes from.

Elon Musk and the Growth of Doge

why is doge doing up elon

No less than Tesla motor’s Elon Musk had been tweeting in a subtle and not-so-subtle way about Dogecoin. A lot of people read all sorts of meaning into his posts. They have to because he’s not quite forthcoming or obvious with his intention.

Maybe he was tweeting Dogecoin memes as a joke, or he finds some pleasure in the fact that he is creating a meme out of a meme that is within a sort of meme financial technology industry.

Who knows what's going on in that multibillionaire’s mind? But the practical effect – as far as cryptocurrency speculators, traders and investors go – is all too real.

Ever since Elon Musk has been communicating to his massive following on Twitter about Dogecoin, its price has just blown up.

In October 2021, Musk revealed that he ONLY owns Bitcoin, Ether and Dogecoin when it comes to his crypto portfolio.

Dogecoin Speculation 

In fact, the bubble fever for Dogecoin has reached a point that some holders are speculating that the price might even reach 1 dollar per coin. That would be epic because, given the tremendous amount of Dogecoins currently in circulation, this would produce a valuation of over 130 billion dollars easily.

Another reason for the bubble is that people who buy in have all the reasons in the world to keep the hype up. The same goes with speculators who buy up all sorts of expensive crypto mining equipment to mine Dogecoin.

Finally, another key part of the bubble dynamics behind this crypto is its low price.

Psychologically speaking, it’s easier for people to throw away money when they feel that they're just throwing away a few cents. Even at 30 cents per unit, which is extremely high historically for Dogecoin, it is still a steal.

Compare 1 unit of Dogecoin to Bitcoin. It doesn’t even come close because Bitcoin is worth 50,000 per unit. Ethereum? Try 3,000 dollars or more.

So when you look at what else is out there, a 30-cent Dogecoin seems like a no-brainer, even though you're buying at the peak.

Will Dogecoin price reach .50 cents?

It's quite likely that the price of Dogecoin could reach .50 in the near future.

However, it's likely the price will continue to fluctuate due to the fact that doge really has nothing that proprietary, no applicable purpose.

To continue to grow past 1, 5 or even 10 dollars though, a lot would need to happen.

First of all, it would have to justify its market cap by increasing its security protocol, coming up with applications or functions that would make it a more attractive environment for blockchain application developers.

It would also help if it had some sort of burning mechanism where it retires coins so as to build in “deflationary” features.

For continued growth, there will need to be some serious advancements behind the crypto itself...however, only time will till when it comes to the long-term price of DOGE.

About Crypto Ryan 61 Articles
Hi, I'm Ryan. I started investing in cryptocurrency in early 2014. Naturally, I want everyone to have the chance to learn about the crypto world so I created this blog! I hope my articles help you understand blockchain and cryptocurrency. Cheers!