Dogecoin Mania: The Myth of a 100x Coin Born from a Joke, Retail Investor Frenzy or Bubble Illusion?Dogecoin (DOGE), which had been dormant for over two years, has recently become the focus of attention in the crypto market. "Dogecoin's price surged over 400% in a year" has become a trending topic, and more than 140,000 people have even called for Amazon to accept Dogecoin as a payment method
Dogecoin Mania: The Myth of a 100x Coin Born from a Joke, Retail Investor Frenzy or Bubble Illusion?
Dogecoin (DOGE), which had been dormant for over two years, has recently become the focus of attention in the crypto market. "Dogecoin's price surged over 400% in a year" has become a trending topic, and more than 140,000 people have even called for Amazon to accept Dogecoin as a payment method. Why does Dogecoin have such a huge surge and appeal?
I. Dogecoin's Past and Present: From Joke to Internet Sensation
Dogecoin (DOGE) was born out of a joke. In 2013, a picture of a Japanese Shiba Inu dog was circulating widely on the internet. At the same time, Bitcoin had entered the topping stage of the bull market, and cryptocurrency became the focus of attention. Jackson Palmer, an Adobe employee in Australia, joked on Twitter: "Invest in Dogecoin - I'm sure it's the next big thing." He quickly registered the domain name Dogecoin.com after receiving support from many netizens and imitated Bitcoin to create the Dogecoin image. Later, another American programmer fan, Billy Markus, referred to Bitcoin's source code and used Litecoin's Scrypt algorithm to create this meme coin.
Unlike BTC's "digital gold" positioning, Dogecoin has been "alienated" from the crypto world since its inception. Its supply is unlimited, with a block being produced every minute, and an annual inflation rate of about 5% is used to offset losses due to lost coins. In fact, the Dogecoin project itself does not have many highlights, and its founders have since withdrawn. It is not exaggeration to say that its value is more a continuation of the prevailing tipping culture in the US than its strong advantages.
Dogecoin is primarily used for tipping, a common scenario being to reward internet users for their outstanding content. In addition, it can also function as a payment for goods or services in general cryptocurrencies or be exchanged for other tokens. Data shows that on Reddit, a popular platform among American grassroots netizens, the Dogecoin section has nearly 1.2 million subscribers, second only to Bitcoin's 2.5 million. Dogecoin forum users are mostly self-organized, and these users have injected the American culture of tipping and charity into the cute and lovable Dogecoin, thus stimulating its lasting vitality.
II. Dogecoin's Bull Market Journey: Who Propelled This Frenzy?
Dogecoin, seemingly harmless, has experienced several violent bull and bear markets, even baffling its creators.
- The 1st Bull Market: From early March to the end of May 2017, This was the initial phase of the meme coin boom in the cryptocurrency market, with retail investors flocking in, and Dogecoin rode the Bitcoin bull market's tailwind to quickly soar to an all-time high of $0.0042.
- The 2nd Bull Market: From November to December 2017, Dogecoin surged all the way to $0.002 in two months, coinciding with Bitcoin's crazy surge of 1.7 times.
- The 3rd Bull Market: From April 10 to 20, 2018, The price rallied all the way to $0.006, the shortest bull market in Dogecoin's history, with a gain of only 100%, a significant rebound in the overall bear market phase of the cryptocurrency market.
- The 4th Bull Market: From late August to early September 2018, Dogecoin surged nearly 2 times during the overall cryptocurrency bear market, triggered by the "Zhengyu Group" registered in Heilongjiang, China, running a pyramid scheme, calling for members to buy large amounts of Dogecoin. This led to the public criticizing Dogecoin as a scam tool. Of course, some have pointed out that the triggering point of this bull market was the concept of combining Dogecoin with Ethereum (ETH) to create "Dogethereum," but during this bull market, Ethereum did not rebound in response, and ultimately this smart contract bridge plan came to nothing.
- The 5th Bull Market: The bull market that began in late January 2021 is different from the previous ones, Dogecoin's upward performance, in terms of both percentage change and duration, is far greater than the previous bull markets. Given Dogecoin's lack of notable features, its rise can only be attributed to the recent cheerleading of Dogecoin's die-hard fans, including celebrities like Elon Musk, Carole Baskin, Mark Cuban, Genne Simmons, Snoop Dogg, and organizations like WallStreetBets and SatoshiStreetBets.
In short, due to Dogecoin's "three noes" characteristics, namely, no strong backing, no technological highlights, and no application landing, institutional investors seldom pay attention to Dogecoin, and the triggers of its past volatility have often been short-term sentiment-driven speculative behavior by retail investors.
III. A Peek at PayPal: Retail Investor Frenzy, Rational Investor's Cautiousness
By a stroke of luck, Dogecoin was born out of a joke, spread quickly through tipping culture, continued because of its matching real-world utility, and skyrocketed and plummeted due to social hype, becoming a bright spot in the cryptocurrency market.
Looking at Dogecoin's previous bull and bear performance, speculative hot money often seeks alternative targets to boost returns when Bitcoin and other mainstream coins are at a high level, and Dogecoin's loyal supporters enjoy both the joy of appreciation and concerns about potential negative impacts.
While short-term speculators can participate in this 100x coin frenzy, considering Dogecoin's recent daily volatility of over 20% and a maximum drawdown of nearly 50%, it is clearly not a wise choice for prudent investors.
Summary:
Is Dogecoin's frenzy a retail investor sentiment surge or a bubble illusion? For those retail investors hoping to get rich quickly, Dogecoin may be a risky gamble, while for rational investors, it may be prudent to remain cautious and calm, avoiding being swept away by this "100x coin" mania.
Dogecoin's future trajectory is uncertain, but the market sentiment and the power of social media it reflects are worth noting. Will this "100x coin" myth continue to unfold? Only time will tell.
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