Did Elon Musk Turn $1,000 Into $277,939?

There’s a lot of buzz right now around Dogecoin, the Shiba-Inu-faced cryptocurrency that reportedly started out as a joke, but quickly gained momentum until it reached a market cap close to $100 billion at its last peak.

What’s the deal with this dog money?

Well, like other cryptocurrencies, Dogecoin experiences price volatility based on what it can do, and what people think it might do in the future. Cryptocurrencies do have actual functionality, but there’s also quite a bit of hype in the mix.

Enter Elon Musk, the magnate responsible for both SpaceX and Tesla (TSLA), two technology market movers in their own rights, either of which could have easily propelled their inventor to celebrity status.

In April and again in July of last year, Musk tweeted about Dogecoin in a positive way, encouraging more traders to snap up this altcoin as its price shot up. How much of Dogecoin’s growth can be attributed to Musk? A lot, some say.

Dogecoin, Elon Musk and SNL Mania

Then on Mother’s Day weekend, Elon Musk appeared on the hit TV show Saturday Night Live, a decades-long tradition that has become a sort of political bellwether for the American population.

Musk was expected to tout Dogecoin on the show in the hopes it would reach a full $1 per Dogecoin, equivalent to approximately $100 billion in market capitalization.

Since SNL, though, the value has sunk back down. Was it because of what Musk did or didn’t say on SNL? This mega-famous person declared that he had Aspergers, and talked about his business achievements, but Dogecoin took a backseat.

Turning $1000 into $277,939

Analysts have done the math – if you held Dogecoin back when it was worth a tiny fraction of a cent, you would have made some 20,000% gains, turning about $1,000 into nearly $300,000!

Those kinds of gains are pretty hard to argue with, and now, prescient DOGE investors are taking their canine funds to the bank, like successful hunting dogs removing old bones from a secure mound.

Canine metaphors aside, though, these intrepid traders are following those who, like the Winklevoss twins, made millions and even billions buying Bitcoin when it was worth just a few dollars (a Bitcoin is now worth something like $58,000.)

Is It Too Late to Buy Dogecoin?

The present deflation of Dogecoin would signify that it’s not too late to get in and buy on the dip (a strategy that involves pouncing on an equity or other investment when its value goes down, hoping that it will quickly rebound).

If you think that Dogecoin is going to rebound in the near future due to more attention and speculative activity, now would be a time to buy in, particularly as Musk has surveyed his millions of Twitter followers to ask them if Tesla should accept Dogecoin to buy cars.

On the other hand, some will want to wait longer to see how low Dogecoin dips.

How High Can Dogecoin Go?

The rapid price explosions of both Biitcoin and Ethereum, not to mention the track records of altcoins like Litecoin and Cardano, have showed us that there is really no ironclad limit to how high a cryptocurrency can go when it’s highly valued by the public.

In fact, some analysts are now calling for Dogecoin to be at one dollar or even two dollars by the end of this year, and $10 by the end of the decade.

Also, lots of people see Dogecoin as the perfect investment vehicle, because the downside is very limited. If Dogecoin goes to zero, you lose 100%, but there’s every chance it could go the other way over time, and be worth many times what it is now. That upside potential is what attracts speculators.

The one thing keeping a lot of traders from rushing into Dogecoin or other cryptocurrencies, aside from fears that the coin will deflate if people start thinking that it is worthless or useless, is the tax reporting requirements.

Word on the street is that the IRS is looking very carefully at cryptocurrency-related filings, and that the agency may not really have the tools to do these assessments particularly well. That’s leading some investors to fret about whether cryptocurrency holdings could cause them some tax issues.

All that aside, the financial picture for Dogecoin or Bitcoin or Ethereum looks especially good right now, as all of these cryptocurrencies have exploded during the pandemic. Some analysts explain these advances by highlighting all that the Federal Reserve and fiscal stimulus has been doing with the dollar – first, keeping interest rates artificially low (near zero) for years, and also, injecting massive amounts of money into the system to help with coronavirus stimulus.

When to Sell Dogecoin?

Inherently, profit taking is a very personal choice.

Nobody can tell you when to sell a cryptocurrency like Dogecoin, except to say that you should let your money grow, and then take profit when you’ve experienced big gains. If the bulls are correct, though, you can sell at any time.

You could double your money and then sell. You could triple your money and then sell. You could wait till the end of the year and see if Dogecoin went up, as predicted, 10 times in value. Just know it could all go up in smoke and be worthless too!

Alternately, you could sell off in pieces, discarding 20% or 30% of your holdings when the coin hits $0.50, unloading more if and when it reaches a dollar…

Any way you slice it, there appears to be quite a lot of potential for cryptocurrencies like Dogecoin that suddenly get attention and start to grow. There’s also the idea of frictionless transactions and low fee verification for fund transfers, all of which supports the idea that decentralized finance is the way of the future, and that some crypto is a good investment on the whole.

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