The Dogecoin (CRYPTO: DOGE) price is up 21% over the past 24 hours, currently trading for 33.3 US cents (42.7 Aussie cents).
The Bitcoin (CRYPTO: BTC) price is heading the other way over the past full day, down 1.1% to US$54,227 (AU$69,522).
At the current price, Dogecoin — a digital token represented by a smiling Shiba Inu — claims the 7th largest market cap of any cryptocurrency, at US$41.4 billion. That's up from 8th place just a few weeks ago when Dogecoin was trading for 23.8 US cents. Even then, on 16 April, Dogecoin had already clocked a mind-boggling 4,996% gain in 2021.
At today's price, the year-to-date gains for Dogecoin are even more jaw-dropping, with the meme coin up 6,990% since 1 January, according to data from CoinMarketCap.
Lacking a time machine, the question crypto investors are asking now is if those kinds of gains mean Dogecoin is in for a major correction. Or if more outsized gains could still be ahead.
Image source: Getty Images
Dogecoin price rocketing…who's laughing now?
Coming to life as an offspring of Litecoin in 2013, the dog meme themed crypto's creators intended for it to be a light-hearted version of the more serious cryptos, like Bitcoin.
Billionaire Mark Cuban, who owns the Dallas Mavericks NBA team, still embraces that lighter side of Dogecoin.
In a groundbreaking move, the Mavericks franchise decided to accept Dogecoin as well as Bitcoin and Ethereum in lieu of cash. Though they're happy to take your cash as well.
Speaking on The Ellen DeGeneres Show Cuban said (quoted by Bloomberg), "Bitcoin is like a digital version of gold, Ethereum is a digital version of a currency and then you got Dogecoin, which is just fun."
Asked whether Dogecoin is a good investment, Cuban replied:
Overall, when someone brings up Dogecoin to you and asks you if it's a good investment, I would say it's not the world's best investment but it's a whole lot better than a lottery ticket, and it's a great way to learn and start understanding cryptocurrencies. And you know what? It could go up. And the second part about it is if it doesn't go up and you want to spend it, you can buy merchandise on the Mavericks store.
There you have it from one of Dogecoin's more ardent and high-profile public supporters. It "could go up" even after this year's epic run. And if not, well, you can load up with NBA jerseys and coffee mugs well ahead of the Christmas season.
A word of caution
Certainly not everyone is a fan of Dogecoin.
Like Jeffrey Halley, a senior market analyst at Oanda Asia Pacific which specialises in trading fiat currencies.
According to Halley (quoted by Bloomberg):
Dogecoin has no apparent commercial or investment use other than as a conduit for speculative mania and the attempt to make a buck. I suspect much of its appeal lies in the fact that it is very, very cheap to buy and sell, as opposed to $60,000 for Bitcoin, making it much more approachable to a retail trader who fancies a flutter.
Of course, you don't have to buy or sell an entire Bitcoin at once. The world's largest cryptocurrency is split into tiny fractions, called satoshi, after the mysterious founder (or founders) of Bitcoin. A single Bitcoin is comprised of 100 million satoshi.
But Halley certainly has a point regarding investor psychology. Buying into a digital asset worth US$54,000 presents a higher psychological bar than buying into one worth a mere 33 cents.
Will that continue to support the Dogecoin price? I'll get back to you on that one in a few weeks' time.
