Dogecoin (DOGE) is a coin whose creation was inspired by the popular doge meme that is based on a Shiba Inu. On July 7, the price experienced a parabolic move that lasted until July 8. During this time, the price rose from $0.0027 to $0.0053, which represents a 43% rally. The Dogecoin pump was pitched by a TikTok individual who believed that Dogecoin could somehow reach $1, which would make it the 2nd largest crypto in the world.
Pump and Dump Cycle Ends
The pump and dump cycles that Dogecoin was going through ended Friday when the price dropped by almost 12% in just a few hours. The trading volumes have also dropped significantly, as interest in the coin has dissipated. On July 6, daily trading volumes for the coin were at about $183 million. However, that had accelerated to $1.2 billion by July 8. The volumes returned to the $180 million range on Saturday, July 11. This was a clear sign that the pump and dump attempted had lived a short life.
A TikTok Challenge Causes the Price Pump
The reason for the Dogecoin price pump was a challenge on the popular social media site, TikTok. In the challenge, a TikTok user going by the user name Jameszg97 posted a video and asked his followers to take part in a “Let’s all get rich” challenge. The user had a small following of just 5,700 but the video has over 900,000 views.
In the challenge, James encourages people to invest $25 in a collective effort to pump the price to $1. If that happens, he says that each person would make $10K. The logic for the challenge was quite simple, he pointed to the massive 800 million TikTok user base as the reason the challenge would succeed.
While the community no doubt took up the effort, it failed to meet its final goal of $1. Many observers expected the challenge to fail from the start. For one, most people on TikTok have no idea what crypto is. It also seems like James did little research on the Dogecoin supply structure. If Dogecoin reached $1 , it would be the 2nd largest digital asset in the world. With a Dogecoin circulating supply of 125B, $1 per Dogecoin would put its market capitalization at $125B, compared to Ethereum which only hovers around $27B.
As a result, most of the individuals on TikTok probably didn’t understand this either. It is worth noting that a platform like TikTok is enjoying success because of the short attention span of most internet users today.
People with experience in crypto knew that the Dogecoin challenge/pump was ludicrous from the get go. It still remains unknown if James managed to make money off the stunt. During events like these, the initiator will usually load up on the asset at a much lower price. This is done so he/she can reap the benefits when other people are buying. This was a classic example of uninformed investors believing they would make money on a digital currency that they knew little about. Just by looking at the supply structure, it was obvious that it would be virtually impossible to hit $1 with retail money. With many pump and dump schemes occurring on a daily basis, it’s always important to do your own research. During the last 24HR, Dogecoin has inched up +5%, currently priced around $.003782.
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