This article was written exclusively for Investing.com
- Elon Musk’s favorite;
- 11th place in his category
- Cryptocurrencies Rise, Sentiment Falls;
- Low nominal prices attract speculators;
- If Bitcoin and Ethereum start to climb, DOGE could become more attractive.
Cryptocurrency, fiat currency and I have one thing in common: their real value depends on the market consensus on the matter. Cryptocurrencies and fiat currency values are based solely on faith. While gold and silver have industrial and ornamental applications, investment demand or belief in their value is a major determinant of the path of least price resistance.
Gold is a metal that governments, central banks and monetary authorities hold as part of their foreign exchange reserves, thus reaffirming the role of gold in the global financial system. Silver in this case is much more volatile, but the price tends to follow its more expensive cousin sometimes lower. The lower cost and higher volatility of silver attracts much more speculative interest when the price is higher or lower.
In the world of cryptocurrencies, if it is analogous to gold, it is silver. Each DOGE unit represents a fraction of the price of Bitcoin and Ethereum and has developed a history of large price swings that could make it a favored speculative cryptocurrency for market participants looking to catch the starting boom called the market. bullish.
Elon Musk’s favorite
Elon Musk’s empire is like an expanding universe. In addition to Tesla (NASDAQ:), the world’s leading manufacturer of electric vehicles, he is the founder, CEO and chief engineer of SpaceX. The portfolio also includes The Boring Company, which addresses traffic and logistics issues in cities through the construction of tunnels. In 2016, he co-founded Neuralink, a company dedicated to creating implantable brain-machine interfaces. Musk bills the product as “Fitbit in your skull.”
Musk has earned millions from shares of Zip2 and PayPal (NASDAQ:). Tesla’s expansion has earned him billions, making him the richest person in the world. In April, he offered $44 billion for his social media platform Twitter (NYSE:). He plans to take the company off the stock exchange, thereby expanding his empire.
Musk is a contemporary Leonardo da Vinci or a Thomas Edison, with a growing portfolio of diverse businesses. He is also a cryptophile with a cryptocurrency wallet. Over the past few years, he has developed a special connection with Dogecoin, a cryptocurrency that started out as a joke and grew into a top-notch digital currency. Musk is so in love with DOGE that he acquired a Shiba Inu puppy named Floki. Shiba Inu is DOGE’s mascot and trademark. Every time Musk tweets about DOGE, cryptocurrency price volatility increases exponentially.
11th place in his category
On May 10, DOGE was the 11th major cryptocurrency out of over 12,390 available.
The chart shows that at a price of 11.09 cents per token, DOGE’s market capitalization is over $14.78 billion. DOGE’s position provides this cryptocurrency with liquidity and critical mass to be reckoned with.
Cryptocurrencies Rise, Sentiment Deteriorates
Cryptocurrencies are alternative means of exchange. Fans such as Musk, Jack Dorsey and others believe that cryptocurrencies will compete with fiat currencies in the years to come. While central banks and governments are free to issue legal tenders at their discretion, cryptocurrency values remain beyond government interference. Their value is determined solely by bids and offers in the market.
As sentiment determines price levels and with over 12,300 cryptocurrencies to choose from, brand image and market positioning are key success factors. Musk’s adoption of DOGE as his favorite cryptocurrency and Shibu Inu as his mascot earned him huge popularity.
The chart shows that from 2013 to early 2021, DOGE was generally worth less than a penny. Interest from Musk pushed the price to a high of nearly 70 cents per token in May 2021. At 11.09 cents on May 10, DOGE depreciated along with the rest of the asset class. However, the cryptocurrency remains at a multiple of its pre-2021 price level.
Low nominal prices attract speculators
The rise of bitcoin from 5 cents in 2010 to nearly $69,000. in November 2021 and the current level of over $30,000. the token has sparked a speculative frenzy in the cryptocurrency asset class.
At 11 cents per token, investors and speculators pounced on DOGE, which rose and fell with the rest of the asset class. The low price of a token creates a magnetic psychological attraction for investors and speculators who dream of returns similar to those achieved with Bitcoin. The Shiba Inu brand and Musk’s participation increase the attractiveness of cryptocurrencies.
Bitcoin at around $31,000 for a token and Ethereum at $2,340. They are expensive. A speculator can buy around 282,000 DOGE for the price of one Bitcoin, or more than 21,200 DOGE for a single Ethereum token.
If Bitcoin and Ethereum start to climb, DOGE could become more attractive
High interest rates, rising and volatile markets across all asset classes have weighed on cryptocurrency prices since November 2021. Bitcoin and Ethereum are still the market leaders, with around 61% of market capitalization market for that asset class, and the leaders tend to dictate the path of least resistance. among all cryptocurrency prices.
Bitcoin and Ethereum are bottoming out. If the price action of the past few years repeats itself in the weeks, months and years to come, more significant upsides could appear on the horizon. When the upward movement begins, DOGE will likely follow the rest like an obedient Shiba Inu pup while Musk cheers on his favorite crypto through his new toy – the world’s leading social media platform Twitter.