Dogecoin Is a Joke, So What Explains Its Rise?

Photo Source: Syced – Public domain

Rockets aren’t the only thing Elon Musk is sending into the stratosphere.

Dogecoin after a three-year decline it’s exploding againUp 250% since Donald Trump’s election – part of a broader wave of optimism in the industryBecause Trump flirted with crypto advocates during his campaign.

Trump’s unofficial appointment of Musk in his own words Department of Public Efficiency – DOGE for short – also helped pump up the dog theme breast money.

This isn’t the first time Musk has described himself as “”.Dogefather”, increased interest in Dogecoin.

In May 2021, its price increased in anticipation of: Musk’s guest appearance In a skit on “Saturday Night Live,” Musk portrayed himself chatting with a financial analyst. Weekend Update The server repeatedly asked him “What is Dogecoin?” he asked. After some head-scratching, Musk’s character eventually admitted that it was all a hustle. The price of the coin dropped into free fall. A little over a year later, lost more than 90% of its peak value.

The losses hit small investors hard. One of these in 2022 We filed a class action lawsuit. Musk was sued for market manipulation and insider trading, but the case was dismissed in August 2024.

Why has Dogecoin, a meme coin that should never be taken seriously as an investment, seen such extreme fluctuations in value?

We’re all in this together

Dogecoin was launched in 2013 with the aim of imitating bitcoin and many other cryptocurrencies that claim to disrupt the world of traditional finance. Two strangers from around the world met onlinecopied the code of an existing coin and branded it with the already popular Doge internet meme – Picture of a Shiba Inu dog surrounded by pieces of broken English: “wow so much money.”

Despite Their main purpose was to make money From being pointless and undesirable, it has become one of the most popular and enduring cryptocurrencies on the market.

Following Dogecoin’s previous rise in 2021, I researched how Its fervent network of influencers and everyday investors have worked together to attract massive interest and capital to the joke currency.

To understand the appeal of these ridiculous investments, you need to look at the time and energy users invest in these networks and the rewards, both financial and social, they receive in return.

Meme coins are collaborative ventures. Members of these online communities have an economic incentive to become outspoken supporters: the more Dogecoin increases in value, the greater their investment becomes. But they also get social validation from other meme coin investors when they pump the coin.

In other words, behind every meme money is a group of strangers with a common mission to make more money.

Dogecoin and its imitators are described by their leaders as: crypto movements, shared journeys And belonging to the community projects. Beyond branding assets with culturally resonant images, whether a Shiba Inu dog or Pepe the FrogSuccessful crypto startups are characterized by complex networks of trust. Trust technology. Trust in the potential for future appreciation. And trust that those with power in the networks will not exploit the rest.

This loyalty is woven among a global network of users who collaborate around the clock to promote their coins and demonstrate their unwavering commitment to its success.

When prices appreciate, collective buzzing happily.

During price declines, community members mutually reinforce their comrades’—and their own—belief that this is just a bump in the road and that their collective efforts will eventually yield a good return. Even in the coldest moments crypto wintersThis ritualistic behavior helps these speculative communities survive. Community replaces financial loss.

Belief in investment strategies and their returns in these communities, like any traditional internet meme, involves repeating and reposting what others have said.

Trolling traditional valuation

The intrinsic value of meme coins cannot be understood in the same way as traditional assets such as stocks and physical commodities. Such assets hold basic information, such as a company’s financial statements or public demand for basic goods from coffee to oil.

Conversely, the underpinnings of meme coins are reflected in network activity, such as daily active users, and less tangible metrics, such as social sentiment and social sentiment. idea sharing – how much public awareness a coin generates compared to its competitors.

Of course, valuations of traditional assets are also affected by these social factors. The difference is that meme money offers little in the way of productive activity. They add nothing to the economy. Sometimes their leadership building financial services around thembut these are often added as afterthoughts, especially as a way to generate more speculative excitement.

Meme coins are subverting traditional valuation conventions and mocking the edicts and dogmas of mainstream investors.

And that’s the point.

Participation in meme coin communities, or any crypto community, requires embracing an alternative economic experience. These are speculative sandboxes for playing outside of traditional investment rules.

Who took the Doge out?

Musk is an excellent meme influencer.

As the richest man in the world, he is seen by many as an example of conscious investing. his big follower It extends far beyond Dogecoin’s social network. And their promotional efforts are so entertaining that the judge in the class-action lawsuit Dogecoin rejects tweets they are just “inflatable” and “no reasonable investor can trust them.”

Dogecoin previously reached the peak of its memetic momentum with Musk’s appearance on “Saturday Night Live.” Now, instead of sitting at the Weekend Update news desk cracking jokes, he sits in Trump’s office giving advice to the next president. In other words, Dogecoin’s memetic resonance has escalated from popular culture to politics, helping the public capture a larger share of mindshare.

While Dogecoin has particularly benefited from Musk’s closeness to Trump, the broader crypto market is leaping with optimism about a crypto-friendly administration. Speaking at the Bitcoin 2024 conference in July, the GOP candidate assured that the United States will succeed “crypto capital of the planet.” After pouring $131 million this election cycleThe crypto industry can now claim 274 pro-crypto members of the US House of Representatives and 20 pro-crypto US senators.

Between Musk’s friendship with Trump and the changing regulatory environment, the dog may run free once again.

This article is republished from: Speech It is under Creative Commons license. Read original article.