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Pushing Dogecoin to the Moon: The Latest Moves in Cryptocurrency

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You have probably heard of Dogecoin (DOGEUSD) by now. Many refer to this cryptocurrency as a meme, or joke, which is in fact how it started out. [1] Dogecoin, or simply known as Doge, has recently seen a surge in its 2021 return at over 8,100% and has now become an asset worth roughly $50 billion. The most recent surge came from buyers in online forums rallying for April 20th to become a holiday known as Doge Day. [2]

As Dogecoin buyers keep pushing for the crypto to reach $1, traders may continue to see high market volatility. Eddie Ghabour, a veteran trader and managing partner at Key Advisors Group, expects that Dogecoin and other cryptocurrencies are merely experiencing a hype stage and “nonsensical” rise. [3] He says that Dogecoin will likely “cease to exist” in a similar fashion to the technology bubble busting 21 years ago. According to Ghabour, the bubble bust will happen again. “We are absolutely in a bubble. That’s why you’re seeing asset prices inflate the way they are. And crypto is the most speculative of all these risk assets.” He does believe that other cryptocurrencies will remain though—as “more of an asset class that institutional managers will continue to add to.” [4]

If you are considering buying cryptocurrencies, Ghabour suggests traders steel themselves because of the high market volatility. He says these crashes—market corrections—normally move around 20% to 30%. Ghabour believes that good times for experienced traders to add to their positions is during these crashes in crypto trading. Ghabour recently bought more bitcoin and Ethereum during such a crash, otherwise known as a dip or crater, of 15%. [5]

Dogecoin is not all fun and games though. The SEC has already begun regulating cryptocurrencies, as seen with its recent investigation into Ripple and its XRP coins. [6] The SEC alleges that XRP is not a currency, but a security and is therefore subject to the same rules and regulations that apply to securities. The SEC’s claim focuses on Ripple’s issuing of XRP coins in order to raise funds to operate its company. [7] Although highly unregulated now, we may soon see new regulations making it harder to create a cryptocurrency; currently many individuals can create one with just a few clicks. Cryptocurrencies have already been deemed by the SEC as regular taxable income and are therefore taxed as capital gains. [8] The SEC may soon pass more regulations relating to cryptocurrency, as indicated by comments made by Gary Gensler, a recently sworn in Member of the SEC. Gensler has said that the SEC needs to provide “guidance and clarity.” [9] 

 [1] Caitlin Ostroff and Caitlin McCabe, “The cryptocurrency dogecoin began as a joke, and now it’s worth more than Ford”, MarketWatch, 20 Apr. 2021, https://www.marketwatch.com/story/the-cryptocurrency-dogecoin-began-as-a-joke-and-now-its-worth-more-than-ford-11618923488, acc. 22 Apr. 2021.

[2] Ibid.

[3] Alexis Christoforous, “Dogecoin ‘will probably cease to exist’: veteran trader”, 20 Apr. 2021, https://finance.yahoo.com/news/dogecoin-will-probably-cease-to-exist-key-advisors-group-160132621.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAADPFYp-_1IaW0G4sUTa9bteH_ptQgKI4rdv1d2RDbHXLPNqJ0rvmDHx2Ql6h0prvokMofGScW7LhxGjkn_i97EPqEBNqcOd5Wtc5XEhtDWYg6ooXJKAbwr4dB0lojfJavF_utVPrd4manp1Bts_EaD73w4tkR8feYEvMFQrBpW-p, acc. 22 Apr. 2021.

[4] Ibid.

[5] Ibid.

[6]  Ina Fassbender, “The SEC Is Taking a Major Step Toward Regulating Cryptocurrencies”, Slate, 8 Feb. 2021, https://slate.com/technology/2021/02/cryptocurrencies-regulation-sec-elon-musk-bitcoin-dogecoin.html, acc. 23 Apr. 2021.

[7] Ibid.

[8] Ibid.

[9] Chris Prentice and Pete Schroeder, “Analysis: Biden’s SEC chair nominee signals more regulation for cryptocurrencies”, Reuters, 2 Mar. 2021, https://www.reuters.com/article/us-usa-crypto-currency-gensler-analysis/analysis-bidens-sec-chair-nominee-signals-more-regulation-for-cryptocurrencies-idUSKCN2AV02H, acc. 23 Apr. 2021; “Gary Gensler Sworn in as Member of the SEC”, SEC, 17 Apr. 2021, https://www.sec.gov/news/press-release/2021-65, acc. 23 Apr. 2021.

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