After just the first month, 2021 has already been defined by political-inspired riots, revolts against the so-called elite hedge fund class and an increasingly influential meme culture driven by a largely homeless population in the past year during government blockades. There is probably no more symbolic phenomenon of the year so far than people getting rich (or losing their shirts) with Dogecoin, a digital asset that started out as a joke based on the popular meme “doge” with a Shiba Inu puppy, who shot in value this week.
Dogecoin fired after Reddit users promoted him following the incredible GameStop rally; at one point, the virtual currency rose more than 600% and currently has a market capitalization of more than $ 6 billion. At the time of this writing, a dogecoin is worth almost 5 cents, which is a dramatic leap from just a week ago, when each coin sold for about 0.008 cents. The coins reached 7 cents at the peak of the cryptocurrency on Thursday night.
The rise in cryptocurrency is the latest turnaround in the retail investment rebellion that caused shock waves across the country this week. Interestingly, the movement that fueled Dogecoin’s rise also created a new spirit of unity among voters on the right and left, after the deep divisions that followed the presidential election in November. Sen. Ted Cruz, R-Texas, and Rep. Alexandria Ocasio-Cortez, DN.Y. – normally fiery political enemies – both agree that it was “unacceptable”For the Robinhood trading app to stop retail investors from buying GameStop shares, after Reddit users threw hedge funds for billions when they raised GameStop’s stock price from about $ 20 on January 12 to $ 347 on January 27.
After Robinhood effectively dropped the GameStop price by preventing negotiations, Redditors switched to Dogecoin. Users of the Reddit r / SatoshiStreetBets forum, in honor of the supposed inventor of Bitcoin, Satoshi Nakamoto, started to publicize the cryptocurrency in the middle of the week with the aim of sending its value “to the moon”.
Software engineers Billy Markus and Jackson Palmer invented Dogecoin in 2013, based on Bitcoin and the meme doge. Unlike bitcoin, there is no implemented limit for the total supply of dogecoins. Initially, the cryptocurrency had a supply limit of 100 billion coins, but in 2014, Palmer announced that the limit would be removed. After the initial 100 billion coins were mined in mid-2015, an additional 5 billion coins were put into circulation each following year. Ultimately, the increasing supply of dogecoin could make it a less desirable asset for long-term crypto investors.
Dogecoin can currently be purchased on a number of exchanges, including Binance and Robinhood, which suffered further criticism for restricting crypto commerce later in the week. When the price of Dogecoin was taking off, Robinhood users began to notice that instant deposits to buy cryptocurrencies were not working.
“Due to extraordinary market conditions, we have temporarily turned off instant crypto purchasing power,” said a spokesman for the trading platform in a statement to CNBC. “Customers can still use the settled funds to buy encryption. We will continue to monitor market conditions and communicate with our customers. “
Despite Robinhood’s repression measures, however, Dogecoin is still going strong. Its most dramatic recovery came after Tesla CEO Elon Musk tweeted a fake magazine cover called “Dogue”, an obvious reference to the currency.
– Elon Musk (@elonmusk) January 28, 2021
Musk’s tweet made Dogecoin the most-mentioned cryptocurrency on Twitter of all time. Followers of Tesla’s CEO may have noticed that this was not the first time he made reference to Dogecoin. In December, he tweeted: “One word: Doge”. Musk, apparently a fan of cryptocurrencies, changed his Twitter biography on Friday morning to “#bitcoin”, which caused the cryptocurrency to rise to $ 35,000.
Demand for cryptocurrencies has increased in recent months, as fears of inflation soar. The Democratic-controlled House, Senate and White House are unlikely to show fiscal restraint and have signaled that they are ready to enact drastic spending measures that could threaten the dollar’s value. President Joe Biden has already proposed an almost $ 2 trillion “economic rescue package” that would include huge bailouts from the blue state, plus unemployment benefits and big checks for all Americans. The project would likely be financed through a combination of tax revenues, loans and printing money.
Cryptocurrencies like Bitcoin, Ethereum and, yes, Dogecoin provide protection against inflation. But they have their own risks. Federal regulations can pose a major threat to this asset class. Treasury Secretary Janet Yellen has already made statements indicating that the Biden government will aim to regulate cryptocurrencies – overwhelming regulation would be enough to make these offers break.
But for now, those concerned about the loose monetary policy pursued by central banks, Redditors angry at hedge funds and retail investors looking to get rich are all getting into the crypto game, hoping that the value of their currencies will “hit the moon” .
Kristin Tate is an author and columnist with a focus on taxes and government spending. Her latest book, “The Liberal Invasion of Red State America”, will be published by Regnery Publishing in 2020. She is a Robert Novak journalism fellow and analyst at Young Americans for Liberty.