Chris Curl,
Editor
Oct. 27, 2021
"I think dogecoin's gonna go back up. It could hit $1.00. That'd be a nice 4X on your money." -- Chris Curl
I remember seeing a headline one morning that read, “1 Bitcoin now costs $40,000”.
It was December 2020. The economy had been decimated by Covid-19 lockdowns decreed by governors nationwide. Businesses were forced to shut down and lay off workers. Earlier that year, the CARES Act passed at an astronomical cost of $2.2 trillion. Anyone with a pulse could see that inflation was going to be a real problem in the near future.
I had a Robinhood account at the time due to its ease of use. It would soon be in the news a lot due to the Gamestop short squeeze initiated by the Reddit army at r/WallStreetBets. A large group of retail investors noticed the massive short positions taken on the struggling video game retailer Gamestop by hedge funds and other big financial players.
Banding together, they managed to push the stock by 1,500% by January 27th. Elon Musk tweeted his support, mainstream media took notice, and everyone started jumping into heavily shorted “meme” stocks with the hopes of becoming millionaires overnight. U.S. trading volumes exceeded their all-time peak set back in October 2008. Brokerages were already buckling under the strain.
On January 28th, Robinhood halted purchases of Gamestop along with many other “meme” stocks. Many other brokerages followed suit. Traders were infuriated because they were allowed to close their existing positions but could no longer open new ones.
This essentially sent the price of all “meme” stocks into freefall. Many retail traders who bought at the height of the craze got wiped out. Most of them were using Robinhood. I was one of them as I had invested in AMC (NYSE: AMC) (although that turned out alright for me in the end).
Jumping back to December — Robinhood had recently allowed trading of a very select number of cryptocurrencies on their platform. Among this handful of coins such as Bitcoin, Ethereum, and Litecoin, there was one that stood out: Dogecoin.
There it was… easy to buy on an app that already had mass adoption. And unlike Ethereum and Bitcoin, which cost thousands and tens of thousands of dollars, Dogecoin was trading at less than $0.01. It seemed undervalued in a cryptocurrency market that was making new all-time highs every week. It even had the support of Elon Musk who tweeted about it positively back in 2019. I figured that with the rise of “meme” stocks and the backing of the world’s richest man, Dogecoin would likely see a $1.00 valuation within the next 5 years.
Jumping forward to January 28th – retail investors, having been brutally stymied by trading restrictions, locked down, isolated and angry, turned their attention to the one asset they could all get their hands on. “Doge” tweeted Elon Musk as he watched the coin soar 800% in 24 hours reaching a price of $0.07. Dallas Mavericks owner Mark Cuban got in on the action, announcing that his NBA team would allow purchases with Dogecoin. The Reddit army had shifted their focus, and in so doing ignited a speculative frenzy.
On April 14th, crypto exchange Coinbase announced a direct listing of Dogecoin which caused the price to surge to $0.10. Celebrity endorsements from Gene Simmons to Snoop Dogg rolled in as Dogecoin surged to $0.45 on April 16th. At this point, Dogecoin’s value had exploded 7,000% that year, giving it a market capitalization of nearly $50 billion.
Its market cap was the 5th highest of all cryptocurrencies. Riding the wave of anticipation leading up to Elon Musk’s Saturday Night Live appearance, Dogecoin reached over $0.50. On the night he hosted SNL, Dogecoin hit $0.71 only to plummet to $0.47 less than an hour later. Much of this was due to Barry Silbert (Digital Currency Group CEO) aggressively shorting Dogecoin the same day.
Otherwise, I think it’s likely Dogecoin would have reached $1.00 that night which is the treasured milestone for the coin among its supporters. Since that time, Dogecoin has been trending down having consolidated in the $0.20-$0.25 range (still massively up for the year).
I held through all of this, firm in my conviction that the crypto bull market was not over. Sure, I could have pocketed $74,000 from a $900 investment in only a few months — but I believed that more was in store for this fun-loving coin.
Dogecoin was created as a humorous parody of the altcoin mania that was sweeping the cryptocurrency space during its first bull market run in 2013. The founders sought to create a peer-to-peer digital currency that would have more mainstream appeal and be more accessible than Bitcoin.
Being worth just a fraction of a penny made it great for tipping. Tragically, both founders sold all their coins and left the project years ago. In fact, one, Billy Markus, sold all his Dogecoin in 2015 for a used Honda Civic. That amount would be worth millions today if he had held. I didn’t want to feel the same sense of regret that he did.
I enjoyed being a part of a community dedicated to having fun and adhering to the motto of “Do Only Good Every Day.” Every time I looked at the logo of that smirking Shiba Inu, I would smile. All of that has value in and of itself. But looking to the future I think Dogecoin can still hit that elusive $1.00 milestone.
First off, it still has the backing of the world’s richest (or near richest) man, Elon Musk. He has never abandoned the coin and famously said, “I pump but never dump” at The B Word conference earlier this year. Having someone with that much clout behind a project creates a lot of momentum.
He’s planning on putting a literal Dogecoin on the actual moon. In Q1 2022, Space X will launch a mission to the moon funded entirely by Dogecoin. The $62 million mission, funded by Dogecoin, will be the first time crypto makes it to outer space as well as the first time a meme of any kind has had such an honor. I think that will make headlines and could be the catalyst for Doge's next great run.
Also, it’s only a matter of time before Tesla begins accepting Bitcoin as payment again. Elon Musk suspended Bitcoin payments for Tesla in May over concerns about its environmental impacts. Much of the mining at that time was done in China and powered by very dirty coal-generated electricity. Since then, Bitcoin mining has moved out of China and into much cleaner energy regions resolving most of Elon’s concerns. The Chinese government taking an adversarial stance towards Bitcoin accelerated this process. In the long term, this is a good thing for Bitcoin.
It’s safe to say there’s a high likelihood of Tesla also accepting Dogecoin for payment in the near future. On May 11th, 2021, Musk tweeted a survey asking if people wanted Tesla to accept Doge. Out of almost four million votes, over 78% said “Yes”. Many are waiting to spend their Doge on a new car.
Robinhood, which currently holds a massive amount of Dogecoin, will be offering crypto wallets towards the end of the year. This will allow people to actually spend their Dogecoin directly rather than just selling it for US dollars.
The interest is still there. Dogecoin’s price retreated along with the rest of the cryptocurrency market during the summer but will likely rebound along with Bitcoin heading into 2022. All it needs are a couple of catalysts like the ones mentioned above to send it to $1.00 and perhaps higher.
A 4X gain in the crypto world is very modest. And banking a cool $100,000 from my fun meme investment would make me a pretty happy guy. I’d probably buy a new car. Maybe even a Tesla.
And I suspect, there are many more out there in the same boat. Hopefully, we all can remember to “Do Only Good Every Day” and enjoy what rewards may come.
Keep showing up,
Chris Curl
Editor, Crypto Cycle