#Market Extra: Should I buy dogecoin? Why prices of the cryptocurrency are surging—but risky

On Monday, dogecoin, pronounced “dohj coin,” boasted a market value of nearly $10.5 billion, up 107% over the past seven-day period, according to CoinMarketCap.com, which provides data on digital assets.

That puts the virtual coin within the top 10 of crypto assets, with bitcoin
BTCUSD
weighing in at No. 1 at a value of $810 billion.

A single dogecoin was valued at 8.1 cents, up around 30% on Monday, back in late January it was changing hands at less than a penny at 0.007 cent as of Jan. 27.

While dogecoin isn’t a virtual asset that is considered to have a utility — a point that could be argued for a number of cryptos — it has been given fresh life after Tesla Inc.
TSLA
CEO Elon Musk in late December tweeted a simple message via Twitter: “doge”

And in early February, Musk’s subsequent bullish tweet about dogecoin, appeared to further catalyze a rally in the crypto.

On Sunday, the Tesla technologists wrote:

Dogecoin co-founder Billy Markus told The Wall Street Journal in an article at the beginning of February, that he created the asset in 2012, as a “lighthearted cryptocurrency,” then known as Bells, to serve as the fun version of bitcoin.

According to WSJ, dogecoin co-founder Jackson Palmer, shared his idea for a cryptocurrency based on the Shiba Inu dog meme, and Markus reconfigured his original code for Bells to fit the meme. 

Markus told WSJ that dogecoin’s recent rally to records “doesn’t make sense,” and equated it to the recent fervor on social-media platforms, like Reddit’s WallStreetBets, that helped drive shares of GameStop Corp.
GME
and AMC Entertainment Holdings
AMC
higher, until those speculative short-selling amplified bets cooled considerably.

More recently, however, the likes of rapper Snoop Dogg, whose real name is Calvin Broadus, and Gene Simmons of rockband Kiss, also weighed in on dogecoin.

Simmons referred to himself as the God of Dogecoin, on a tweet account associated with him:

Broadus tweeted an image of the Shiba Inu on Saturday:

So is dogecoin worth all this attention?

Experts in crypto say investors should be operating with more than a modicum of caution:

“These are strange times with elements of ochlocracy manifesting as populism – from the Capitol Hill to GameStop,” Charles Hayter, CEO of London-based research site CryptoCompare, told MarketWatch.

“People are moving markets en masse and are playing greater fool with each other without understanding the ramifications or their own psychological limitations,” the researcher added.

Bullish bitcoin investors make the case that price gains in the world’s No. 1 cryptocurrency are supported by a limited supply of the crypto that is inherent in its code. Only 21 million bitcoin will ever exist and so-called mining for bitcoin, or solving complex computational problems that are rewarded by bitcoin, become harder as time goes on. The final cache of bitcoins likely are not going to be mined until around 2140.

Dogecoin, on the other hand, has no limit to how much of it can be put into existence, with the number of dogecoin that can be mined at any given time varying remarkable from one to hundreds of thousands of dogecoins.

Nonetheless, interest in dogecoins underscore the appetite for alternative assets in an environment where 0% interest rates are prevalent as governments around the world attempt to mitigate the economic harm from the COVID-19 pandemic.

Dogecoin’s price has surged over 1,600% since its recent lows. Bitcoin was up 48% so far this year, the Dow Jones Industrial Average
DJIA
advanced 2.3%, while the S&P 500 index
SPX
climbed nearly 4% in 2021 thus far.

Billionaire Mark Cuban, who has maintained a less euphoric view on bitcoins and dogecoins, said the moves in cryptos can serve as inexpensive teaching moments for newbie investors. He said the rise in dogecoins serve as a teaching tool for his son, citing an interview with Forbes via a tweet.

Forbes quoted Cuban as saying “[Dogecoin] literally, and I say this with all seriousness, it’s the best entertainment bang for your buck available.”

“You can buy $1 worth or $10 worth and have fun watching it all day every day,” Cuban said.

To be sure, some investors may not find cryptos as much fun, particularly if they end up barking up the wrong tree when it comes to dogecoin.

“Musks musings are interesting and he can be controversial – however it’s peoples individual interpretations and actions that are at fault,” Hayter said.