Bitcoin and its many peers have surged to new levels of
popularity over the past year, but they're still a mystery to many investors.
Cryptocurrency market is said to be more volatile and
vulnerable than any other. The prices of poplar digital currencies such as
Bitcoin, Ether, and Dogecoin can change overnight, touching new highs or
falling to unexpected lows.
The extent to which the market is vulnerable can be gauged
from the fact that a tweet from billionaire Elon Musk or a statement from an
industry expert is enough to influence the immediate prices.
Over the past year, Bitcoin, the world's biggest and oldest
cryptocurrency, witnessed an
unprecedented boom. Other digital tokens such as Ethereum and Dogecoin, the
meme-based cryptocurrency, have also received immense support from the Tesla
and SpaceX CEO.
Since the start of 2021, the price of Bitcoin has surged 89% to over $54,000. That’s seven times as great as the S&P 500’s return during the same period. But those staggering Bitcoin gains don’t come close to the largest return posted this year by a major cryptocurrency.
The top spot also doesn’t go to Ethereum, which is up 343%
this year to just under $3,300. Nigel Green, CEO and founder of deVere Group,
said earlier this week that Ethereum could reach $5,000 by the end of the week.
Even if it happens, Ethereum still would be dwarfed by the
gains posted so far by Dogecoin: The price of the cryptocurrency, which was
launched as a joke, is up over 13,500% this year to $0.63, according to end of
Tuesday prices on Coindesk.
For perspective, a $1,000 investment in Dogecoin at the
start of 2021 would now be worth over $135,000.
As of the end of the day Tuesday, the market capitalization
of Dogecoin stands at $86 billion, according to Coindesk. That’s compared with
market caps of $375 billion and $1 trillion, respectively, for Ethereum and
Bitcoin.
On Monday, celebrity chef Guy Fieri tweeted images of
himself donning Dogecoin merchandise. Billionaire entrepreneur Mark Cuban has
also tweeted favorably about the crypto. “As long as more companies take Doge
for products/services, then Doge can be a usable currency because it may hold
its purchasing value better than [money] in your bank. If interest rates
skyrocket or the amount spent falls or stagnates, so will Doge. Yes, a joke is
now legit,” Cuban tweeted on May 2.
But the biggest driver of Dogecoin’s publicity has come from
[hotlink]Tesla[/hotlink] CEO Elon Musk, who frequently references the crypto in
tweets. But he might not be a true Dogecoin supporter: Musk previously said his
Dogecoin tweets are “just meant to be jokes.”
This story was originally featured on Fortune.com