Meme-based cryptocurrency dogecoin has experienced a sharp decline in market capitalization after losing about $13.47 billion in just three hours, highlighting the asset’s volatility.
Data provided by CoinMarketCap indicates that the asset’s market capitalization dropped to $78.76 billion from $92.23 billion recorded three hours earlier on May 8, 2021. The sharp decline in doge’s market cap emerged after the digital currency’s value plunged to $0.67 from the $0.73 all-time high price.
Dogecoin’s volatility is further exhibited by the fact that at some point it witnessed a $6.3 billion surge in market capitalization over the last 24 hours correlating with the earlier record price.
Musk’s SNL debut likely to impact doge’s price
The cryptocurrency’s rally is a result of support from celebrities like Tesla CEO Elon Musk, who has backs the asset through regular tweets. The latest record price emerged ahead of Musk’s Saturday Night Live (SNL) show debut as a host.
Experts are now predicting that the asset will experience some volatility ahead of Musk’s appearance on SNL with a $1 price mark in sight.
On May 7, Musk had hinted that the show would feature doge after tweeting a photo of himself, singer Miley Cyrus and rapper The Kid Laroi with dogecoin’s Shiba Inu dog photoshopped alongside.
The recent doge rise has also resulted in several investor millionaires. As of May 4, 2021, there were about 2,866 dogecoin wallets with a value of at least $1 million. The figure represents a growth of 116% from April 23 when 1,321 wallets had doge with the value of at least $1 million.
Caution over dogecoin’s rise
With the spike in doge’s value, some market analysts warn investors to approach the asset with caution since it lacks a strong support concrete-like bitcoin.
According to crypto investment firm’s Galaxy Digital CEO Mike Novogratz, doge’s rise is a ‘retail phenomenon’ due to the federal reserve’s supply of more money into the economy. According to Novogratz:
“This is very much like GameStop where these meme coins tap into something in the young, new investor base, and it becomes fun. It builds on momentum, and they want to go after the shorts. I don’t think it is going to have legs because it is all retail, and all of a sudden — there is nobody behind it. No institutions coming in. No strategic buyers. Nobody is working on how to make doge part of your portfolio.”
Despite the skepticism around doge, the asset has surged by about 17,000% in 2021.