Compass Money: Dogecoin Tries to Land on the Moon—Then Fails

Designed as a meme currency, Dogecoin’s market capitalization now exceeds that of Ford. (Flickr)

Dogecoin, a cryptocurrency initially designed as a joke, surged 770 percent to a high of 45 cents in April. The price has since dropped to 27 cents as of April 24, but it is still up nearly 5,600 percent since the beginning of 2021.

Graph: Dogecoin price this year. (Coindesk)

Following the mid-April surge, Dogecoin’s supporters attempted to further hype up the cryptocurrency ahead of April 20, the day usually celebrated for the legalization of marijuana. Dogecoin enthusiasts coined the day #Dogeday and #Doge420, and its supporters even included corporations like Slim Jim and Axe. Joking that Dogecoin would go to the moon, investors attempted to push the cryptocurrency to $1. 

“[I]f it gets to $1, we’ll make it happen. #dogeday and #doge420.” (Twitter)

The attempt appears to have failed, given that the value has dropped nearly 30 percent since April 20. Cryptocurrency Bitcoin and Ether also slumped—Bitcoin declined to less than $50,000 Friday, one week after reaching $64,000 for the first time. Some believe the tumble is due to President Joe Biden’s new tax plan, which would nearly double the top marginal capital gains tax rate. The new proposal may have forced investors to sell off their cryptocurrency before the higher rates kick in. 

However, Dogecoin is still up 5,600 percent since January and up 13,000 percent since this time last year. Unlike Bitcoin, Dogecoin has no cap on the supply of coins, making it a more risky investment.

“This is absurd,” remarked Billy Markus, the co-creator of Dogecoin. “I haven’t seen anything like it. It’s one of those things that once it starts going up, it might keep going up.” 

The cryptocurrency’s meteoric rise may in part be attributed to Tesla CEO Elon Musk’s support. After he tweeted “Doge Barking at the Moon” on April 15, the cryptocurrency soared more than 100 percent. After he tweeted “Doge” in February, the cryptocurrency shot up 50 percent overnight. According to research firm Pipslay, nearly 40 percent of investors polled have at least considered a trade based on Musk’s tweets. With 52 million Twitter followers, Musk has considerable influence over the financial market.

“Doge Barking at the Moon.” (Twitter)