Why is Dogecoin going up and how high can it go?
DOGECOIN hit a record high of $0.4854 on May 4, and investors are hopeful to exceed that by the end of the year.
We explain why the "joke" cryptocurrency is going up and if it will reach the trending predictions of $100 (£72).
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But it's important to note that there is a risk of losing all the money you put in to Dogecoin and other cryptocurrencies, as well as investments related to them.
Buying cryptocurrencies, like any investment, is a very risky business and making money is never guaranteed.
You should make sure you know the risks of investing in cryptocurrencies and that you can afford to lose any money you put in.
Cryptocurrencies are highly volatile, so the value of your investments can go down as well as up in the blink of an eye.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
What is Dogecoin?
Dogecoin is a cryptocurrency and was first launched back in 2013.
Dogecoin has the image of a Shuba Inu dog as its logo.
The image became a popular internet meme called doge, and it features the dog surrounded by text in the comic sans font with words like "much wow".
Software engineers Jackson Palmer and Billy Markus originally created Dogecoin as a joke based on this meme.
It has been marketed as the "fun" version of bitcoin but has gained in value and attracted more serious interest since then.
Two weeks after it first launched, its value jumped 300% after China banned banks from investing in cryptocurrencies, according to Investopedia.
Dogecoin then skyrocketed alongside other cryptos during the bubble that peaked in 2017, and it fell with the rest of them over 2018.
On May 4 this year, Dogecoin reached its highest value yet of $0.4854, according to crypto data firm CoinMarketCap.
Dogecoin previously hit an all-time high of $0.4377 per coin on April 16 this year.
Why is the Dogecoin price going up?
Dogecoin has received backing from celebrities including Elon Musk and Snoop Dog, pushing up the price.
Dogecoin's latest surge follows the announcement that a well known cryptocurrency platform will now accept Dogecoin.
Customers who use eToro – and there are around 20 million of them globally – will now be able to buy and sell Dogecoin.
The online trading platform left users users locked out of their accounts earlier this year after crypto markets crashed.
Users were unable to sell their holdings in bitcoin and ethereum because of technical difficulties.
Dogecoin is not the only cryptocurrency that's rocketed in price this year.
Bitcoin, the world's largest cryptocurrency, Ethereum and Ripple's XRP have surged this year too.
But just like Dogecoin they have also pulled back from record highs over this time, demonstrating how volatile prices can be.
Ethereum has also hit fresh highs, breaking $3,400 and quadrupling in value this year.
Backing from famous faces and established financial companies like PayPal have sent prices rising this year, along with Coinbase floating on the stock exchange.
Coinbase is a cryptocurrency exchange platform and is the first to go public, marking a major milestone for digital currencies.
But analysts have warned that Dogecoin's surge is a bubble that has to burst.
Dogecoin is trading at $0.4826 at the time of writing on Tuesday May 4 and is up around 25% over the last 24 hours and up around 74% over the past seven days.
The price of Dogecoin is volatile, which means it can rise and fall sharply from one day to the next – and it's done just that in recent months.
How high can Dogecoin go?
Provscons expects that Dogecoin will surpass the $1 mark and that means the market cap could potentially reach $135 billion.
But there isn't really any way of predicting where Dogecoin is headed as the value could fluctuate like any cryptocurrency does.
And there are fears that this one is simply fuelled by hype and speculation, rather than genuine value.
Dogecoin is an inflationary token which is what separates it from Bitcoin, and the inflationary model might bring down prices instead.
So far, over 110 billion of the tokens have been mined and stand at a market cap of £49.31billion ($68.39billion).
So if the price of Dogecoin could reach £72 ($100) like some are hoping, then the market value would be in the trillions and it would likely take too much money to get there.
But it's more likely the £0.72 ($1) target will be reached by the end of the year, although the last attempt to raise the cryptocurrency's value on "Dogeday" (April 20), made the token plunge in value.
How has Dogecoin's price changed?
Dogecoin has experienced a surge in trading this year that has seen its value soar, according to crypto data firm CoinMarketCap.
Entrepreneur and Tesla chief executive Elon Musk has often tweeted about the cryptocurrency which has stoked interest and sent the price up.
Other famous people including Snoop Dogg and investor Mark Cuban have also tweeted their support of Dogecoin.
Dogecoin initially surged in January, jumping by a staggering 972% from $0.007 (less than 1p) the day before.
That was off the back of a bunch of Reddit threads calling for it to hit a value of $1 per coin.
The target was an attempt to mirror a share surge in heavily shorted companies like GameStop.
Shares in GameStop soared by a staggering 700% earlier in January after an army of amateur traders targeted the games retailer, causing professional hedge funds who'd shorted it to lose billions.
But for the amateur traders, the surge saw them make some serious cash.
In simple terms, "short selling" is when professional investors borrow shares of stock to sell, and then buy them back at a lower price.
Following GameStop's share surge, Reddit users on other threads referenced WallStreetBet's effort to squeeze out Wall Street hedge funds and urged people to buy into Dogecoin too.
One thread, titled “Dogecoin is the next GME/Bitcoin” (GME is GameStop), said getting Dogecoin to $1 a coin would be "an incredible achievement".
It added it would "completely change the crypto market… Dogecoin to the moon."
Dogecoin also received a boost after it was tweeted by an account called "WSB Chairman", which insists it isn't associated with the Reddit group.
The price of Dogecoin has surged again in April but is volatile and fell back from its previous record highs.
Brits are being warned they risk losing all of their money if they invest in bitcoin and other cryptocurrencies.
It comes after a ban on some crypto-related investment products.
From Dogecoin and Litecoin to Bitcoin – here are the different cryptocurrencies explained.
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