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- Is The Dog Back?
As we approach Elon Musk’s favorite holiday of “4/20”, we have been fascinated by the emergence of the most recent absolute insanity out of the cryptocurrency realm -” Dogwifhat”!
Have you heard of “Dogwifhat”?
A quick Google search, and you can find this background…
Dogwifhat (WIF) is a Solana-based dog-themed memecoin launched in November 2023. It features a Shiba Inu wearing a knitted hat as its mascot.
In case you were wondering, here is the photo…
Most importantly, here is what this "memecoin" has done price-wise since it was introduced a few months ago…
You can see here that it has gone from $0.17 to $3.34 today, or a 20x return since late December!
In this table, you can also see that it currently has a $3.3 billion market cap.
We will give you a moment to let all this sink in – haha!
We could say many things about this phenomenon and what happens next.
Funny enough, we have said them before almost precisely three years ago! This was when the original “dog” coin – Dogecoin - exploded on the scene.
For today's HX Daily, we will share our thoughts from back then so you can figure out whether you need some dog coins in your portfolio.
Enjoy!
If you've been following any media this year – financial or otherwise – you've likely heard of the stratospheric rise of the cryptocurrency “Dogecoin.”
In a sign of these wild times, this crypto launched as a joke is up more than 10,000% this year.
In 2013, software engineer Jackson Palmer wanted to create a cryptocurrency to make fun of Bitcoin. He chose to brand his new crypto idea after a popular meme: a picture of a Shiba Inu (a Japanese breed of dog) with text sharing the inner monologue of the animal in broken English. The memes looked like this:
At the time, bitcoin and other cryptocurrencies had just burst onto the scene. Here's how Bitcoin performed going into that period...
Palmer decided to combine the two trends into a joke on Twitter and put out the following tweet:
The tweet drew much attention...
So, Palmer bought the website domain (www.dogecoin.com) and left a note asking folks to contact him if they wanted to make Dogecoin a reality.
Around this time, a software engineer at IBM named Billy Markus had been experimenting with creating his own cryptocurrencies. He saw that the code for Bitcoin was open source, meaning he could create whatever he wanted. His first invention was a joke cryptocurrency based on the video game Animal Crossing that he called "bells."
Markus saw Palmer's note... And the two pressed forward to launch Dogecoin. They worked off the Bitcoin source code, made some aesthetic changes and tweaks, and then sent the new creation into the world.
Most cryptocurrency creators do something called "mining," where they create a bunch for themselves. But Palmer and Markus – because they created Dogecoin as a joke – barely did any mining and ended up with only about $5,000 in Dogecoin each.
Dogecoin quickly caught fire on the Internet forum Reddit and other places. Soon, members of the crypto community began getting involved... And there was an explosion in mining pools, services, etc. Dogecoin was real.
From there, this new "altcoin" had a back-and-forth history, as many of its peers have had. Both founders became disillusioned with their runaway creation and divorced themselves from connections to it. The coin went up a lot... and then down a lot. It also suffered from an exchange bankruptcy and several hacks.
However, all of this began to change in early 2021 as the power of Reddit users over the financial markets began to exhibit itself.
By now, most folks are familiar with the incredible story of video-game retailer GameStop Corporation’s (NYSE: GME) wild ride earlier this year. But at the same time, another trend was emerging - interest in Dogecoin.
It was a perfect fit for Reddit users due to their love of absurdity and anti-authoritarianism. If GameStop was their tweak to the traditional stock investing community, Dogecoin was their tweak to everything else in the financial world.
This was a joke currency symbolized by a meme of a cute dog that had no real utility and questionable technology. Still, an army of retail investors piled in.
Several famous people became involved and helped the trend along – folks like rapper Snoop Dogg, Gene Simmons of rock band Kiss, and former porn star Mia Khalifa.
However, the most prominent proponent was tech entrepreneur and Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk. He first tweeted about the cryptocurrency on February 4 with the simple tweets "Doge" and "Dogecoin is the people's crypto."
These quickly sent the value of Dogecoin surging almost 50%, but the crypto was just getting started.
Musk continued a tweetstorm about it. Later that day, he posted the following:
From a value of $0.03 the day before, Dogecoin's price quickly more than doubled to $0.08.
From there, the price stayed stable – although it didn't go down. Remember, this is a joke cryptocurrency with questionable technology.
Then, last month, it exploded higher.
The exact catalyst is difficult to determine, but Dogecoin proponents were excited about the unofficial cannabis "holiday" of April 20 – 4/20.
The currency surged another 350% before April 20 but quickly sold off. It was an essential example of the old Wall Street adage: "Buy the rumor, sell the news."
Then, with Musk booked to host Saturday Night Live this past weekend, the price exploded again to more than $0.60 before pulling back again after Musk called it "a hustle."
In the chart below, you can see the wild ride this year...
So, why is a joke cryptocurrency represented by a meme, backed by questionable technology, and hyped by an eccentric and controversial tech entrepreneur matter?
Well, maybe you've even been pitched on getting involved. Whether you should or not depends on your investing goals.
If you're looking to have some fun and maybe make some big money, but with a high chance you'll lose all your money, I won't tell you not to do it.
But keep in mind that this isn't even a criticism of Dogecoin. What's happening here is real.
If people can buy and sell an asset and make or lose money on it, then it's real. I've said many times here at HX Research that stocks are just pieces of (digital) paper, and the "value" of cryptocurrencies is just in perception.
If enough people believe something has value, then it does have value.
Whether Dogecoin was meant as a joke is irrelevant. It's relevant if people want to ascribe value to it. If enough people want to bet on a joke or a lark, that asset will increase.
On the other hand, if your investing goal is to make money and manage your wealth, you're better off staying away from Dogecoin... especially now.
Dogecoin is a lot like "penny stocks." These micro-capitalization stocks are often traded under $1 with questionable prospects. Still, they can go up a ton if the story around them catches on with enough people.
Like Dogecoin, they can be fun to invest in. They can also make you money. But over time, you're much more likely to lose most – if not all – of your money.
These aren't assets I'd ever recommend to HX Research readers. But they're a more enticing investment before they roar higher in price.
Buying them at $0.03 or $0.08 before everyone you know is talking about them – while still a hazardous strategy – is better than buying them after they've exploded 2,000%.
With Dogecoin and other wildly speculative assets, consider investing if you enjoy it, but mentally write off 100% of your money the moment you buy. You might get lucky and make some money. But even if you lose everything, maybe you had some fun.
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