Understanding the Impact of Dogecoin on the Market and Its Price Surge

1. Dogecoin's Influence on X

Dogecoin may have originally started as a joke on internet culture - an alternative to Bitcoin that was meant to satirize the wild speculation in the cryptocurrency markets. Dogecoin lacks the higher value-U.S. dollar exchange rates. However, it has remained a fairly popular token in the cryptocurrency system. Due to its low value and huge supplies compared to other cryptocurrencies, Dogecoin quickly found a community and has been used in many small-scale transactions. As Dogecoin has a low value, it is more appropriate to use Dogecoin for transactions rather than using Bitcoin. High transaction fees and the volatile nature of Bitcoin prices could result in more problems when developing applications to facilitate micro-tips, such as the Dogetipbot. Dogecoin could be ahead of other altcoins due to its strong community and the utility of the coin. To show this, the Dogecoin community has successfully raised funds for many charity events and other causes. They have raised funds to send the Jamaican bobsled team to the Olympics and also raised funds to sponsor NASCAR driver Josh Wise. Speculation is high on whether the NASCAR and Olympics event administrators would accept Dogecoin as payment for the sponsorship. This could increase the overall value of the coin and serve as a good alternative to the high transaction fees and volatile Bitcoin prices for event organizers.

1.1. Speculation about Token's Use

One consistent aspect of Dogecoin's price surge over the past few months is speculation surrounding what the real-world use case for Dogecoin is. Cryptocurrencies that have had big price surges in the past have often had effective use cases, such as smart contracting ability for Ethereum or a method of payment for goods and services such as Bitcoin. In recent years, a large proportion of the cryptocurrency market has shifted towards the decentralized finance (DeFi) sector, with tokens that are often built on the Ethereum network and are primarily used to provide liquidity, lending, borrowing, and generating yield through investment in various DeFi protocols. At this point in time, the existing speculation is that Dogecoin was originally intended as a funny and light-hearted joke to mock the rampant speculation and get-rich-quick mentality of the average altcoin buyer, without providing much lasting value. Then, as the Dogecoin community began to grow, it developed into a tipping currency where users would frequently tip one another for creating or sharing good content. This phase was often seen in Dogecoin's earlier years where the community was active on platforms such as Reddit and Twitter and would frequently raise money for charitable causes and sending the Jamaican bobsleigh team to the Sochi Winter Olympics.

1.2. Elon Musk's Role in Dogecoin's Price Surge

On April 1st, 2021, Musk tweeted that SpaceX would put a "literal Dogecoin on the literal moon." The tweet included an edited image of a Shibu Inu holding a flag on the moon, with the caption "to the mooooonnn!!" The value of Dogecoin began to surge in response to the tweet and continued to increase over the next few days. Musk's tweet about Dogecoin being his favorite cryptocurrency has also caused surges in the value of Dogecoin. On May 13th, 2021, Musk conducted a Twitter poll asking if Tesla should accept Dogecoin as a form of payment. This tweet caused an approximate 20% increase in Dogecoin's value, showing the power of Musk's online presence. The impact of Musk's words and actions on Dogecoin's value is significant and undeniable. His large online following and support for the cryptocurrency have caused increases in its value, leading some to even joke that Dogecoin is a "Musk coin".

The speculated advisor to Tesla's recent $1.5 billion investment in Dogecoin, Elon Musk, has had significant impacts on the token's price. Musk has been a public supporter of Dogecoin, expressing his enthusiasm for the "joke cryptocurrency" through various avenues. He first revealed himself as the "CEO of Dogecoin" through his Twitter bio back in April 2019, and his interactions with the cryptocurrency have only escalated from there.

1.3. Social Media Impact on DOGE Prices

An example of this would be a recent study conducted to determine the effect of social media on the price of the altcoin, AntShares, which conducted Asia's first-ever ICO. The two-week study used news and social media data to show VADER sentiment analysis scores for AntShares in comparison to the price of Bitcoin. The study showed that news media had a significant effect on the altcoin's price but had little effect on the price of Bitcoin. The reason for this was due to news media using Bitcoin as a benchmark for other cryptocurrencies. A Visual GARCH analysis also showed that there were bidirectional causality effects between social media trend and the return volatility of AntShares. Although AntShares and Dogecoin are two different entities, this study shows that there is a strong correlation between news/social media and a cryptocurrency's price. This is something that Dogecoin has experienced in the past month with a great increase in its price and volume of trade, seeing it re-enter the top 20 traded digital currencies.

Social media has been the most powerful tool for any kind of information or publicity on any matter, whether it be business, online marketing, interviews, etc. It brings a lot of recognition and visibility for the products and improvements in price if it's a stock market. Even newspaper and website articles, both were rated as having a greater influence on a cryptocurrency's price. The latter, which encompasses social media, was found to have a negative relationship, which could be attributed to print news media's conformity and resistance to change. Social media has a higher chance to report breaking news and it is under constant pressure to deliver information in real-time. Hence, there is a higher chance for it to have both a positive and negative effect on a cryptocurrency's price. This new era of technology has dramatically changed the speed in which news is delivered to the public, with the rise of the internet bringing about a decline in the relative importance of the evening news.

2. Dogecoin's Price Surge

2.2. Factors Driving the Price Increase There are several factors that are driving the current surge in price. Dogecoin is a currency that is designed to have a constant annual inflation of 5 billion coins, this was implemented to keep miners mining the coin. However, the current rise in price has attracted traders and investors who are looking to hold DOGE as a store of value. This has been seen from the current rise in Hodlers (i.e people who buy and hold the coin). This comes with its recent exposure to retail traders and new investors during the Gamestop push which has contributed to a rapid increase in demand for cryptocurrencies. Market manipulation has caused a stir in the modern-day economy, and with Dogecoin having a history of price manipulation schemes, it has naturally been caught up in a wave of demand from traders who are looking to make large returns in a short time period.

2. This increase in price is a sign of good faith from the community. Dogecoin has managed to secure a spot at number four in terms of highest trading volume in the market just below Tether, which gives its price action much more validity. All of this is a successful build upon the original currency launch which did not change its "increasing coin supply" Proof of Work block schedule.

1. On reaching this milestone, Doge managed to outpace the market's expectation, and also managed to outperform some industry giants like Bitcoin, Ethereum, and Cardano. This spike occurred after it overcame the 0.1 USD mark.

2.1. Current Highest Level Since 2021 Since the beginning of the year 2021, Dogecoin has seen a significant increase in its price. It has reached its current highest level at the time of writing. This rise has been quite rapid and impulse in nature.

2.1. Current Highest Level Since 2021

The most significant achievement was at around a two-month time span that led up to September when Elon Musk prodded frequently about his spaceflight organization, SpaceX, launching a moon mission that was paid fully in Dogecoin. These increases in expectations have triggered a bullish run followed by estimated boosts that would help the value of Dogecoin. Musk's heavy influence on cryptocurrencies has consistently affected Dogecoin's price movements throughout 2021, especially during his hosting on Saturday Night Live where his remarks about Dogecoin have caused price volatility. The latest anticipated defining moment to date is the announcement of a Dogecoin-themed NASCAR and a vehicle itself sponsored by Jack Kennedy. This has not yet had an opportunity to cause swells in cost, but the goal is to help the Dogecoin community and raise awareness with a generally generous amount.

2.1. Current Highest Level Since 2021, Dogecoin has had a fast ascent and presently sits at the most significant level since 2018. The cryptocurrency has had various critical defining moments that have supported general sentiment hugely. The value of Dogecoin has soared on the proposed Coinbase exchange listing. Announced in September 2021, this was after June when Coinbase announced that they were hoping to list Dogecoin in the following 6 months. The launch of another Alpha-2 update for the Dogethereum scaffold has also been a catalyst to restore trust in Dogecoin.

2.2. Factors Driving the Price Increase

Social Media Elon Musk has tweeted a poll asking whether Tesla should accept DOGE as payment. News of this poll has brought in waves of DOGE buyers causing its price to surge. On 2nd February, 2021 Elon tweeted: "Doge spelled backwards is Egod" followed by "ur welcome" a day later. These 2 tweets alone have brought in nearly 40,000,000 DOGE in volume over the course of 3 days. His contributions of tweets since late 2020 to present day have caused DOGE to double in price and even hitting 70-80% increases in BTC value. The power of Elon Musk and DOGE is undeniable. Other celebrities such as Snoop Dogg and Gene Simmons have also jumped in to ride the DOGE wave posting content of it to their social medias. With their followers combined with Elon, it will be an ongoing snowball effect for DOGE purchases. DOGE has become somewhat of a meme mascot for cryptocurrency and with its backing only stronger now, it will likely help bring in further price increases compared to its ATH in 2018 given the increasing crypto market and the influx of new retail traders.

Summary Dogecoin (DOGE) has recently hit an all-time high (ATH) level on 4th May, 2021, at $0.7376. While DOGE is known to bring in price pain to short sellers, retail traders and FOMOers rejoice at the tremendous pumps it brings. From its previous ATH in 2018, DOGE has managed to surge up to a 60% increase in market price. What factors are contributing to this surge?

2.3. Comparison with Other Cryptocurrencies

The comparison of Dogecoin's current value to its value before January 2014 and lack of a potential surplus has been used to suggest an event similar to the Wage Price Spiral. If one considers that 1 Dogecoin was worth $0.0006 or £0.0004 and that low inflation in Dogecoin's value resulted in a wage constraint and loss of X to the macroeconomic issue. This form of comparison suggests that a massive loss of income in real terms for Dogecoin's stakeholders would have a similar effect to the Keynesian push for wage cuts. With a sudden increase in the demand of volume of Dogecoin with few available substitution goods, Keynesian economic theory would suggest a very steep aggregate demand curve for Dogecoin which would inflate the price level. Currently this comparison only goes as far as predicting effects on price and volume level but a continuation in demand for Dogecoin could lead to its rehabilitation and hope for future employment into X.

The comparison of Dogecoin's dramatic surge in value has been compared to several key events in the history of the modern currency economy. Some suggest the recent surge in Dogecoin was an event similar to the Mississippi Bubble of 1720, a comparable crisis in value to the current United States Dollar. Others suggest that it was more akin to the Wall Street Crash of 1929 and subsequent Great Depression.

2.3 Comparison with other cryptocurrencies

Impact of Dogecoin on X and its price surge

2.4. Market Reaction to DOGE Price Surge

Here is an analysis of the current situation of Dogecoin. Since Dogecoin was created in 2013, it has been known to be "The people's cryptocurrency" because it is cheap and easy to use. It has been widely used as a tipping system on forums such as Reddit and Twitch, and in the gaming industry. Its community is very big and extensive, far beyond that of many other cryptocurrencies. Dogecoin's price history has been unpredictable and very different from other cryptocurrencies. A huge amount of Dogecoin is held by a small number of people. This makes it easier for these individuals to manipulate the price in the short term by selling only a small portion of their assets. For example, an unknown source at the end of January posted on the internet "A tweet is coming soon that will pump DOGECOIN up 3x" and proceeded to buy a massive amount of Dogecoin, driving the price to an all-time high in its 8-year history. Then on Feb 4th, Elon Musk tweeted "Dogecoin is the people's crypto" to which the price of Dogecoin then surged even more than before. Due to the vast amount of Dogecoin that this individual was holding, this resulted in a price increase of Dogecoin over 17x in the month of February. This price movement has sparked both positive and negative reactions from multiple different parties.