A $1000 bet on Dogecoin to start 2021 now tops the average US income
It took Amazon 13 years to deliver a 10,000% return to investors. Dogecoin has now taken five months.
The cryptocurrency (DOGE-USD) hit a new all-time high of $ 0.60 on Tuesday, pushing Dogecoin market cap to the fourth largest coin, according to data from CoinMarketCap, Yahoo Finance's data partner. That's now more than the market cap of Moderna, one of the companies that supplies COVID-19 vaccines to save the world from the pandemic.
That means a $ 1,000 bet on Doge earlier in the year, when the price was about half a cent, would now be worth more than $ 100,000. At the price of $ 0.56, around which Dogecoin appeared to be stabilizing on Tuesday, the position would be worth $ 103,703. Given the U.S. Census Bureau last reported an average American household income of $ 69,000, the same $ 1,000 bet on Dogecoin could have made about 1.5 times the average household income in just five months.
It's an amazing way to think about the 10,000% plus rally the cryptocurrency that was founded as a hoax has put together this year. Dozens of tweets from Elon Musk, CEO of Tesla, drew attention to it earlier this year and most recently. And then Dallas Mavericks owner and Shark Tank star Mark Cuban showed up as another attorney, recently saying it was "better than a lottery ticket" on "The Ellen Degeneres Show".
To be fair, the story isn't just hype. The Oakland A's joined the Dallas Mavericks this week to become yet another sports franchise that accepts Dogecoin as a form of payment. The team's president, Dave Kaval, took to Twitter to confirm the A's made "the first Dogecoin transaction" in Major League Baseball history on Monday. Last month, the team also processed its first Bitcoin transaction when it was selling a suite for a single game.
Yet even with the narrative of added acceptance and the appeal of a musky appearance on Saturday Night Live that could include another high profile mention of Dogecoin, it's hard to predict how the cryptocurrency can hold up.
Let's not forget that the Dogenes Genesis story has not yet been detached from SNL itself. It was founded to make fun of the explosion of crypto projects with an obvious joke. The cryptocurrency also has no technical upper limit for the delivery of tokens in circulation. That alone could give any crypto investor a break, as the Federal Reserve often cites a primary reason Bitcoin fans choose the dollar in the face of "unlimited money pressures". But Doge, which also offers cheaper transaction fees and faster processing times than most other cryptocurrencies, had something else to offer on board long before Musk. For years, the cryptocurrency has had a broad and welcoming community.
The r / Dogecoin Reddit group now has 1.6 million members, up from 1.3 million three weeks ago. As The New Statesman's Will Dunn points out, a growing network of people engaging in the joke could do very well to keep the blast going.
"The South Seas Bubble of 1720, Railway Mania of 1847, and the dot-com boom of the early 2000s collapsed because the actual business activity being speculated about was oversold," he writes. "But many Dogecoin investors seem to be aware that it will not become a medium of exchange or long-term store of value. They know the emperor has no clothes and they still want a selfie with him."
It recalls another quote popularized by a legendary investor who happens to have nothing to do with cryptocurrencies, Warren Buffett. As he said, "You only know who has swum naked when the tide goes out."
For Doge investors, they may be happy to be naked for a long time.
Zack Guzman is an anchor for Yahoo Finance Live and a senior writer on entrepreneurship, crypto, cannabis, startups and breaking news at Yahoo Finance. Follow him on Twitter @zGuz.
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