It took Amazon 13 years to deliver a 10,000% return to investors. It has now taken Dogecoin five months.
The cryptocurrency (DOGE-USD) hit a new all-time high of $0.60 on Tuesday, pushing Dogecoin’s market cap north of $70 billion to become the fourth-most valued coin, according to Yahoo Finance‘s data partner CoinMarketCap. That’s now larger than the market cap of Moderna, one of the companies shipping COVID-19 vaccines to save the world from the pandemic.
That means a $1,000 bet placed on Doge to begin the year, when its price was around half of one penny, would now be worth more than $100,000. In fact, at the $0.56 price that Dogecoin seemed to stabilize around on Tuesday, the position would be worth $103,703. Considering the U.S. Census Bureau last reported the average American household income at $69,000, that same $1,000 bet on Dogecoin could have delivered about 1.5-times the average household income in just five months.
It’s a staggering way to think about the more than 10,000% rally the cryptocurrency, which was founded as a joke, has been able to put together this year. Dozens of tweets from Tesla CEO Elon Musk brought attention to it earlier this year and last. And then Dallas Mavericks owner and Shark Tank star Mark Cuban emerged as another advocate, recently saying it was “better than a lottery ticket” on “The Ellen Degeneres Show.”
To be fair, the story isn’t all hype. The Oakland A’s joined the Dallas Mavericks this week in becoming another sports franchise to accept Dogecoin as a form of payment. The team’s president Dave Kaval took to Twitter to confirm that the A’s processed “the first Dogecoin transaction” in Major League Baseball history on Monday. Last month, the team also processed its first bitcoin transaction when it sold a suite for a single game.
Yet, even with the narrative of added acceptance and the allure of a Musk appearance on Saturday Night Live that could feature another high-profile Dogecoin mention, it’s hard to forecast how the cryptocurrency can keep up its performance.
Let’s not forget Doge’s genesis story is not so far detached from SNL itself. It was formed to poke fun at the explosion of crypto projects with an obvious joke. The cryptocurrency also technically has no cap on the supply of tokens in circulation. That by itself might give any crypto investor pause, given “unlimited money printing” by the Federal Reserve is often a main reason bitcoin fans cite for choosing it over the dollar. But Doge, which also offers cheaper transaction fees and quicker settlement times than most other cryptocurrencies, has had something else going for it long before Musk jumped on board. For years the cryptocurrency has boasted a wide and welcoming community.
The r/Dogecoin Reddit group now boasts more than 1.6 million members, up from 1.3 million just three weeks ago. As Will Dunn at The New Statesman points out, that growing network of people who are “in” on the joke could very well keep the explosion going.
“The South Sea Bubble in 1720, Railway Mania in 1847, and the dot com boom in the early 2000s all collapsed because the real business activities that were being speculated on were oversold,” he writes. “But many of Dogecoin’s investors appear to be well aware that it is not going to become a medium of exchange or a long-term store of value. They know the emperor has no clothes and they still want a selfie with him.”
It’s reminiscent of another quote popularized by a legendary investor who coincidentally wants nothing to do with cryptocurrencies, Warren Buffett. As he said, “You only learn who has been swimming naked when the tide goes out.”
For Doge investors, maybe they are happy to be naked all long.