Dogecoin Price went down more than -60% after it Grew Exponentially in the Last Few Days
The Dogecoin price tanked from $0.45 to its low today of $0.16. In the last ten days, Dogecoin (DOGE) price soared up to more than 500% of its previous value, rallying at $0.45, overshadowing the market capitalizations of institutions like Barclays, ING, and Credit Agricole.
At its peak Dogecoin had a $50 billion market capitalization, thereby momentarily solidifying this meme-driven cryptocurrency’s place in the finance industry.
Dogecoin has even received support from no other than Tesla and SpaceX’s CEO, Elon Musk. Musk, considered the second wealthiest person worldwide, has expressed his support for the popular meme cryptocurrency in several Twitter posts earlier in the year.
Many members of the Dogecoin community are currently rooting for it to reach the $1 target, hoping that the DOGE would be on a 1:1 ratio with the US dollar. However, what most don’t realize is that its supply, currently placed at 129.6 billion, will only grow in value in the following years.
It is estimated that it will increase by approximately 20% in just five years, resulting in an impressive $156 billion market cap. If that happens, it will be double the current value of Binance Coin or more known as BNB.
Additionally, if Dogecoin reaches the proposed $1 target, it will also surpass numerous assets in the market, each one with a $156 market cap or below.
To put things in perspective, international companies like Morgan Stanley, Citigroup, Shell, and Unilever are currently valued at a $150 billion market cap. This means these companies will be valued lower than the meme-based crypto if it reaches a value above $1.
Moreover, while institutional investors can bet against those assets by opening short positions, the same cannot be said for Dogecoin. This cryptocurrency is listed on neither Bakkt nor CME, which means betting against it is out of the question, particularly for US-based professional traders.
The cryptocurrency market is steadily growing, which means many bank-focused exchanges will eventually offer altcoin spinoffs. This can help stabilize the market and make it more efficient.
However, as of now, Dogecoin’s recent impressive market cap is still no match for established banks. Comparing the two will only result in distorted figures. Moreover, some people in the community are requesting that new regulations be put in place to help avoid these inefficiencies.
On the other hand, it should also be noted that earlier this year, Gamestop’s shares increased by over 860% in January. This was due to the frenzy generated by their social media-coordinated investments, resulting in a market capitalization valued at more than $24 billion.
However, while these inefficiencies can cause temporary distortions in the market, it’s doubtful that a seasoned investor will deliberately choose a company like Gamestop over the National Bank of Canada. After all, they generate more than 2 billion CAD annually in terms of profits.
With that said, although reaching the $1 mark will be a historical moment for many Dogecoin investors, it will unlikely stay that way for long, primarily when regulations and other shorting methods are implemented.