WHAT IS GOING ON WITH DOGECOIN?
I am sure many of you have been following, or at least heard about the craziness surrounding Gamestop's stock $GME and the short squeezers from Reddit responsible for skyrocketing the price from $60 to over $483 in a matter of days. What exactly does the $GME situation have to do with $DOGE's boom? Well, let's find out:
As a quick summary, a Reddit group known as Wall Street Bets, also referred to simply as WSB, collectively started going after the short sale positions on $GME. As there were enough of them, primarily using the Robinhood app, they were able to continuously pump up the price and beat out the short-sellers. Short-selling is an investment strategy in which investors speculate that the price of a stock is going to decrease. These short-sellers borrow shares of that stock and sell them at market price, only to later purchase back those shares when the price falls to return them back to the lender. The short-sellers then profit on the difference.
Essentially: Borrow > Sell High > Buy Low > Return to Lender and pocket the difference in price.
However, when it came to $GME, the WSB investors not only prevented the price from falling but started pumping up the price through a high volume of purchases. This forced the short-sellers out of the market as they started to lose money, as had sold their borrowed shares and would now have to pay a higher price to buy back those shares to return to the lender.
The situation now became: Borrow > Sell High > Buy Higher > Return to Lender.
Then, on Wednesday, Reddit along with Discord temporarily banned WSB. Many cried out, rightfully so, but eventually, the subreddit and server came back online.
As the market opened on Thursday and trading began, $GME's price continued to soar reaching $150 and eventually over $400. Robinhood, and brokerages like Fidelity and E-Trade, in a very surprising move, completely banned trading for $GME. Some platforms claimed this was to protect the market makers, while Robinhood claimed this was in response to massive volatility and trading volume. The bottom line was that retail investors, like WSB, could no longer purchase $GME - they could only sell their positions in full. Due to the lack of purchasing in the market, $GME's price fell from $483 down to $190; much higher than it was when this all began, but considering the trend prior to the trading ban, it is much lower than it should be.
This in turn sparked many conspiracy theories that Robinhood was in contact with larger institutions that forced them to ban the trading, etc. Now, Robinhood, after coming under fire fury unseen before from the Reddit, Twitter, and Professional communities (and even from members of Congress), has announced they will allow limited trading of $GME and other stocks on Friday.
Unsurprisingly, many users in WSB have voiced that they will not sell but hold and re-attack the markets on Friday. Many users have also transferred their shares off of Robinhood to their brokerage accounts.
There is no doubt that Robinhood and the brokerages will be in a lot of trouble for what happened on Thursday, but WSB is ready to get their revenge on Friday.
So, Mitesh, what does all of this have to do with Dogecoin again?
I'm glad you asked.
As trading for $GME and other volatile stocks like $AMC and $BB was banned, this became an opportunity to recognize that the future is decentralized. Essentially, many users started to recognize cryptocurrencies and blockchain technology for the benefits that they've always had. The ability to transact freely, the fact that you actually own the coins you invest in your personal wallet, that you can trade those coins at any exchange that supports them by easily transferring your coins, and many other benefits. Many users began signing up for exchanges like Coinbase and Kraken to begin investing in cryptocurrencies.
This is where Dogecoin/$DOGE comes in. After having been created in 2014 as a coin based on the popular doge meme, over the years its base and users began pushing the coin as the "coin for the internet." It has experienced many bull runs based on Twitter trends and recently a Tik Tok trend in 2019 that tried to push all Tik Tok users to invest $10 in $DOGE. Now, after all of the insane trades from $GME, to $BB, $AMC, $PLTR, and $NOK, many users turned their attention once again to $DOGE.
Since $DOGE was not banned on Robinhood, investors were very easily able to turn their attention to the famous meme coin and began investing in it like crazy at a starting price of $0.0012 to a high of $0.0812 (as of writing this article at 11:50 pm ET on January 28, 2021). That is an INSANE increase and pushed $DOGE to an all-time high.
I even put out a Tweet regarding $DOGE and some notes to those investing in cryptocurrencies for the first time:
I ended up getting quite a few questions that I will address below:
If not Robinhood, where should I go to invest in $DOGE?
Using a crypto exchange is the way to go here. Kraken is one of the major exchanges that supports $DOGE. It does require verification prior to trading, but that typically takes a few minutes.
What is a good wallet?
You should find a wallet that you are comfortable with using, as each has a different UI that may be difficult for newcomers.
Exodus is a good software wallet, also known as a Hot Wallet - which means that it is connected to the internet and can be vulnerable to sophisticated attacks, although unlikely. It's also free.
A much safer, but costly option is to use a Cold Wallet like Trezor or Ledger. Cold Wallets are physical wallets that are only connected to the internet when you connect them when you want to make a transaction.
Where should I conduct my research?
As a shameless plug, I would recommend my platform Omnia Markets to conduct research to learn about coins, their backgrounds, and even use from great technical indicators. The platform is in its Beta stage, so there may be some bugs, but our data comes from one of the most reliable sources in the industry and all of our features are free (you just have to make an account first)! We also have some new updates coming to the platform starting next week where we are updating the charting tools to look much better while also adding over 200 technical analysis indicators. We will also be implementing two of our proprietary Artificial Intelligence algorithms to give you unmatched insight into some of the top cryptocurrencies. Be sure to check it out!
Oh, and Messari is also a good place too!
What does this mean moving forward?
Well, that's anyone's guess. While many investors on Reddit and Twitter want to see the price hit $1, $DOGE still has quite a ways to go, and there is no telling if investor sentiment will last long enough to continue this bull run that high. All I can say is that anything is impossible and I, for one, would love to see $DOGE hit $1.
So here's to $DOGE to the moon!
Please invest wisely and conduct your own research prior to making any investments.
Disclaimer: This article is intended for educational purposes only and is not to be constituted as investment advice. I can and will not be held accountable for any investments you make. I also hold $DOGE and have held $DOGE since 2017.