After the big increase in the price of Dogecoin, a person could buy a Tesla electric car with that investment. The creators of DOGE did not expect it to become such a valued asset, so they left it in the hands of the community.
A year ago, no one could have predicted that Dogecoin would be one of the biggest players in the crypto world in 2021. The Japanese meme-inspired cryptocurrency never sought to become the center of attention for investors and the media. The exponential increase in its price since the beginning of the year allows buying many things with an investment of USD 1,000 made in January.
Elon Musk’s Influence on the Rising Price of Dogecoin
Dogecoin was born in 2013 when Billy Markus and Jackson Palmer wanted to create a joke cryptocurrency to experiment with blockchain technology. They did not intend the virtual currency to eventually become a globally valued asset. For that reason, they abandoned the project and left it in the hands of the community.
Despite being only the product of an intellectual exercise, Dogecoin has managed to capture the imagination of people worldwide. Communities of Internet users have bought the cryptocurrency as part of a trend toward investment memes. They do not invest in this type of financial product because of its intrinsic qualities or its economic value. They do it as part of a cultural movement manifesting itself in finance, which also drove the rise of GameStop shares.
One of the great promoters of Dogecoin has been businessman Elon Musk, who had always expressed his support for the cryptocurrency. However, only a few months ago, he transformed this support into a call for investment in the virtual currency. In that way, he led millions of people to acquire the crypto asset, thus increasing its demand and its price. This is an excellent example of how a cultural influence has financial repercussions.
It Is Possible to Buy a Tesla Electric Car with USD 1,000 Worth of Dogecoin
Concerning the latest increase that Dogecoin experienced, it went from USD 0.06 to USD 0.34 per unit, at the time of writing this article. Coinbase’s initial public offering (IPO), which boosted the entire crypto market, has also played a role in that growth. Likewise, a recent tweet by Elon Musk, in which he showed his support for DOGE, finally drove the virtual currency higher.
This year, the most profitable investment has not been gold, Tesla, Bitcoin, or GameStop, but Dogecoin. If someone had invested USD 1,000 in DOGE at the beginning of the year, they would have around USD 55,000 right now. That amount would be more than enough to buy a Tesla electric car, for example.
Of course, this raises the question of whether the growth in the price of Dogecoin will be sustainable over time. Besides, Dogecoin has not developed an economic use that justifies its profits, and it seems that it will not do so either.
By Alexander Salazar