The rise and fall of Dogecoin
... and the story of the man who went all in
A year ago, I met up with Glauber Contessoto, the man who maxed out his credit cards and threw all his life savings into Dogecoin and refused to sell even as it climbed higher and higher. As Dogecoin hit 25 cents, Andre Jikh met up with him and asked him if he planned to sell - to which he replied that his plan was to HODL till it hit a dollar. This worked to his favor, turning his $189k into $3 million! That is, until it all came crashing down. Now, his portfolio is worth a little over $230k.
So here’s the story of how a coin that started out as a joke grew into such an epic tale of community and glory before turning into a tragedy… and why it still might not be the end of the chapter. Let’s dive in!
How Dogecoin started
Dogecoin was created as a joke by Jackson Palmer and Billy Markus in 2013. While the creators might have come up with the idea as a joke, it is a perfectly valid open-source cryptocurrency and its blockchain is functional, so it wasn’t long till the coin started gaining a following of its own because of the Doge mascot and the memes that surrounded it.
But initially, Dogecoin wasn’t even listed on major exchanges and treated seriously, unlike Bitcoin or Ethereum. 2 years ago, it was worth just a fifth of a cent - If you had invested $1000 into it back then, it would have grown by 4000% into $40,000 today! Let’s look at the timeline of Dogecoin to understand how it grew to where it is today.
The rise of Dogecoin
2019: Robinhood Crypto launches, enabling its 10 million users to start trading a list of seven cryptocurrencies - which included dogecoin. At this point, its price was just 0.2 cents.
July 2020: Tiktok Dogecoin challenge. A wave of memes and social media influencers starts pushing dogecoin, in an effort to inflate its price. One user said: “Dogecoin is practically worthless. There are 800 million TikTok users. Invest just $25. Once the stock hits one dollar you’ll have 10-grand.” Though the official Dogecoin account warns the public that these tiktokers might not have their best interests at heart, the trick works. Dogecoin almost doubles from July 6 to July 10, hitting 0.43 cents.
Dec 2020: Elon Musk tweets this:
It sends the Twitterati into a frenzy, and pushes the price of Doge up 30% to 0.3 cents in less than 24 hours. This is not the last time Elon would shake up Dogecoin.
Jan 2021: Reddit. Wallstreetbets joins the party, and the community which drove up the likes of Gamestop and AMC does the same for Dogecoin. One of these tweets is from the account WSBChairman who is technically not even affiliated with WSB. The price rises by as much as 600%! Dogecoin reaches 1.5 cents, and then goes up to as high as 4.5 cents all in a matter of a few days.
Feb 2021: Elon Musk tweets about Dogecoin again, and there is a 50% rise instantaneously - the price is now $0.075. This is also around the time Glauber, the Dogecoin Millionaire, enters the market - He buys in when the price is at 4.5 cents.
April 20, 2021: Doge Day is celebrated. Elon Musk and Mark Cuban give further support to Dogecoin, and businesses start accepting payments in Doge. Media attention increases, driving prices up further to 36 cents. Considering its price one year back, the increase is more than 18,000%!
May 2021: The perfect storm. Dogecoin hits an all-time high of 72 cents, when Gemini and other brokers start supporting Dogecoin. Elon Musk makes an appearance on SNL and calls himself the “Dogefather” on the announcement tweet. The Dogecoin millionaire’s investment is now worth around $3 Million. This is also the point where another news article makes an appearance: Billy Markus had sold all his Dogecoin in 2015 for the price of a Honda Civic, and at this point in time, the market cap of Dogecoin is worth more than that of the Honda company itself!
Right as all this euphoria was building to a peak…
June 2021: The Crash. Robinhood Crypto crashes, just after Elon’s SNL appearance, and the crypto market starts falling in a coordinated way, with Bitcoin hitting $30,000 and Dogecoin falling to 30 cents. As environmental and security concerns are also added to the picture, the enthusiasm starts dying down.
June 2022: The Crypto Bear market. Even though Crypto has been falling throughout the year due to concerns of inflation and regulations concerning crypto gains, the Fed rate hikes deliver the final blow, bringing Dogecoin’s price to 8 cents. At the time of writing this article, it is trading at 5.8 cents.
After the crash
The celebrities who were supporting Dogecoin when it was at its peak still haven’t given up on it, but they are more muted in their support. Mark Cuban stated that the price would only stabilize when Dogecoin finds some mainstream utility and there is commerce in it. Other companies like Gucci and Wordpress have announced that they will be taking payments in Dogecoin soon.
Elon Musk stated that SpaceX would soon be accepting Dogecoin for merchandise payments. Interestingly, Jackson Palmer, the co-creator of Dogecoin had accused Elon Musk of being a grifter who is selling the dream that others could also be a billionaire like him one day. He also warned that the Crypto winter had not reached its worst and that it would have a much larger implosion in the future.
The Dogecoin Millionaire though, had not sold any of his investment at all. He had held on to all of it. So how did he feel about losing more than 90% of his investment? When I met him the last time, I had asked him, and this is what he had to say.
“I should have sold some”
In my conversation with him, the Dogecoin Millionaire kind of regretted not selling it - he thinks he should have sold at least a little bit - but the reason he’s holding it and didn’t sell even at the peak, is because he would have felt like an imposter. He felt like he would have let down his entire community and all his fans who have been with him since day one, when he’s been preaching for Doge - if he had cashed out, it wouldn’t have felt right.
“And honestly, I’m in a better place today, than where I was a year ago. I’m moving to Vegas, I’m getting a Tesla, and I’m going to buy even more Doge now that it’s gone down…” he says.
To be clear, he doesn’t ask his fans to YOLO it on Doge, and his decision to go all in on Doge is his alone. Let’s see how it plays out! As far as my thoughts go…
The pros and cons
It looks like the crash is still on and we haven’t found a baseline value yet. But as far as the currency itself is concerned, it does have some good points.
Dogecoin was designed as a functional currency, and it’s faster than Bitcoin (by about 10x) and its transaction fees are much lower than Ethereum. As more merchants and businesses start including Doge as a mode of payment, it might gain use as a valid payment method.
Dogecoin’s highs and lows have moved in sync with Bitcoin which has a cyclical rise-fall-rise nature. There’s no reason why the same thing can’t happen with Dogecoin.
On top of this, the community behind the coin is very strong, and that’s probably the best thing about it.
On the other hand, there are some definite downsides.
To be useful as a currency, Dogecoin needs to stabilize in price, and that means that people have to move on to the next shiny thing for Doge to find utility and not be a speculative investment.
The future is also very foggy - Just because it has gone up in the past doesn’t mean it will in the future. For all you know, it could just crash further.
There’s no supply cap on Dogecoin. While some think that this is a good thing, it also means that more and more people have to buy it at the same time for its price to go up.
So, my advice remains the same - It’s an alternative investment and it’s fun to be part of the Dogecoin community, but that alone does not make it a good investment. I can’t wrap my head fully around how Dogecoin’s price dynamics work and I’m content just investing a very small portion of my overall portfolio into it - I would suggest that you limit your downside as well.
See you next week with another deep-dive!