Technology

Dogecoin: A Top Cryptocurrency With Potentially Attractive Percentage Reward

This article was written exclusively for Investing.com

  • Elon Musk’s favorite cryptocurrency
  • 11th active class leader
  • Cryptocurrencies go up and down based on trust
  • Low nominal prices attract speculators
  • If the and the take off, the DOGE could be more attractive

Cryptocurrencies, fiat currency, and the y la have something in common: Their intrinsic value depends on the market consensus of value. The values ​​of cryptocurrencies and fiat currencies depend solely on faith. Although gold and silver have industrial and ornamental applications, investment demand, or faith in their value, is the main determinant of the price path of least resistance.

Gold is the metal that governments, central banks and monetary authorities hold as an integral part of their foreign exchange reserves, validating gold’s role in the global financial system. However, silver is much more volatile, although its price tends to follow that of its precious metal cousin up and down. The lower cost of silver and its greater volatility attract much more speculative interest when the price tends to go up or down.

In the world of cryptocurrencies, if Bitcoin and Ethereum are analogous to gold, he is their silver. Each unit of DOGE is a fraction of the price of Bitcoin and Ethereum and has developed a history of wide price movement that could make it the favorite speculative cryptocurrency of market participants looking to jump on the rally bandwagon.

Elon Musk’s favorite cryptocurrency

Elon Musk’s empire is like the universe: it’s expanding. In addition to Tesla (NASDAQ :), the world’s leading electric vehicle manufacturer, he is the founder, CEO and chief engineer of SpaceX. His portfolio also includes The Boring Company, which solves traffic and logistics problems in cities by building tunnels. In 2016 he co-founded Neuralink, a company that creates devices to embed in the human brain, facilitating fusion with machine technology. Musk explains the product as “a Fitbit (NYSE:) in your skull.”

Musk made millions from his interests in Zip2 and PayPal (NASDAQ:). Tesla’s growth earned him billions and led him to become the richest person in the world. In April, he offered $44 billion for Twitter (NYSE :), the social media platform, and now plans to take the company private, expanding his empire.

Musk is a modern Leonardo da Vinci or Thomas Edison, with a portfolio of expanding diversified businesses. He is also a cryptophile, as he also owns a cryptocurrency portfolio. In recent years, he has developed a particular interest in Dogecoin, the cryptocurrency that started as a joke and became a top-notch digital currency. Musk is so in love with DOGE that he has a puppy named Floki. The Shiba Inu is the mascot and trademark of the DOGE. Every time Musk tweets about DOGE, the cryptocurrency’s price volatility tends to skyrocket.

11th active class leader

On May 10, DOGE was the 11th leading cryptocurrency out of more than 12,390.

Top Cryptos By Market Cap.

Top Cryptos By Market Cap.

Source: CoinMarketCap

The chart shows that at 11.09 cents per token, DOGE’s market cap was over $14.78 billion. DOGE’s position provides cryptocurrency with liquidity and critical mass that is no joke.

Cryptocurrencies go up and down based on trust

Cryptocurrencies are alternative means of exchange. The most adept like Musk, Jack Dorsey and others believe that cryptocurrencies will compete with fiat currencies in the coming years. While central banks and governments can issue legal tender fiat currency at will, cryptocurrency values ​​remain unaffected by government interference. Its value is determined solely by the purchase and sale offers in the market.

As trust determines price levels and there are over 12,300 cryptocurrencies to choose from, branding and market positioning are critical success factors. Musk’s adoption of DOGE as his and his pet Shibu Inu’s favorite cryptocurrency has created a huge following.

Description: USD/USD Chart.

Description: USD/USD Chart.

Source: CoinMarketCap

The chart shows that DOGE was mostly held at a fraction of a cent from 2013 to early 2021. Musk’s interest pushed the price to highs of almost 70 cents per token in May 2021. At the 11.09 cent level on May 10, the DOGE corrected its downward course with the rest of the asset class. However, the cryptocurrency remains at multiples of its pre-2021 price level.

Low nominal prices attract speculators

Bitcoin’s rise from 5 cents in 2010 to almost $69,000 in November 2021, and its current price level at over $30,000 per token, created a speculative frenzy in the crypto asset class.

At the 11 cents per token level, investors and speculators have flocked to DOGE as it rose and fell with the other members of the asset class. A low price per token creates a magnetic psychological attraction for investors and speculators who dream of Bitcoin-like returns. The Shiba Inu branding and Musk’s involvement drive the cryptocurrency’s appeal.

Bitcoin, at about $31,000 per token, and Ethereum, at $2,340, are expensive. A speculator can buy about 282,000 DOGE for the price of a Bitcoin or more than 21,200 DOGE for an Ethereum token.

If Bitcoin and Ethereum Take Off, DOGE’s Appeal Could Increase

High interest rates, the rise of the US dollar and volatility in the markets of all asset classes have weighed on cryptocurrency prices since November 2021. Bitcoin and Ethereum are the market leaders, and their capitalization of The combined market accounts for roughly 61% of the asset class, so these leaders tend to determine the path of least resistance of all cryptocurrency prices.

Both Bitcoin and Ethereum appear to be on their way to bottoming out. If the price action of the last few years repeats itself, further sizable rallies could be on the horizon in the coming weeks, months and years. When these rallies take off, the DOGE is likely to follow like an obedient Shiba Inu puppy, while Musk cheers on his favorite cryptocurrency via his new toy, the world’s largest social media platform.

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