Dogecoin's wild rise was one of the biggest surprises of 2021

Yahoo Finance's David Hollerith details Dogecoin's very eventful 2021 as the cryptocurrency soared more than 3,000%.

Video Transcript

- We're going to shift gears now to crypto. Because the crypto class of 2021 is out. There's been no shortage of surprises in the crypto markets this year. And one of the biggest is Dogecoin. If you had put-- it's never good to do this-- but if you had put $1,000 into Dogecoin at the beginning of the year it would now be worth roughly $30,000. So Yahoo Finance's Senior Crypto Reporter David Hollerith is here to discuss the FOMO that I'm sure a lot of people are feeling as a result of that statistic that we just lobbed out there. David, just tell us, how did all of this start?

DAVID HOLLERITH: Yeah. Just real quick. Not financial advice. Just sort of recapping the story here. So Dogecoin and other meme coins sort of took off this year. And you know we've had other big surprises in the crypto space. But most of those, at least after the fact, can be explained in a way that you know has a legitimate answer.

So Dogecoin was created in 2013 as a joke. It was largely meant to fuel sort of the play off of the speculative nature that was being seen by Bitcoin and other assets. And, up until this year, it's largely just sort of driven by a community of online people who were fans of the cryptocurrency.

So, again, it has no limit to its supply issuance. That means it runs contrary to the value of most successful cryptocurrencies. But its performance also flies in the face of what a lot of people in the crypto sector are sort of working towards which is trying to make cryptocurrencies have value outside of a speculative nature.

Now, Doge traded around one cent per token at the beginning of January. It quadrupled in 24 hours the same week that Wall Street Bets traders pumped up the prices of GameStop. Now a week after that, Elon Musk got a hold of Dogecoin, and he tweeted about it. And he called it the "people's currency"-- or the "people's crypto." And that was sort of the watershed moment, if you will, for Doge.

After that, we saw more celebrity endorsements. Mark Cuban opened up customers to purchase tickets from for Maverick games with Doge. And then in May, it climbed to its peak of $0.73 per token. So that's a five month gain since January of 13,000%.

Now Doge trades about 76% lower, which is still a 1,200% increase from where it was a year ago. So it's still huge in terms of surpassing the expectations for something that I think that skeptics and also cryptocurrency enthusiasts might argue has relatively little fundamental value. But, again, cryptocurrencies in general, they don't trade on cash flows.

So just a few other highlights to bring up. Robinhood announced in their second quarter earnings that crypto accounted for about more than 50% of their overall transaction revenue. And of that crypto revenue, Dogecoin accounted for 60%. So Dogecoin has been a huge boon for online brokers.

And just in general terms of search, Dogecoin has been ranked in the US, this year, as the number one cryptocurrency searched on Google Trends. So this was reported by a financial advisory company. And so it beat out Bitcoin and Ethereum. And then also, interestingly enough, there's been gobs of other sort of Dogecoin derivatives, the most popular of which was a Shiba Inu coin-- is Shiba Inu coin. Shiba Inu coin took fourth place.

So it's interesting to see that, despite what a lot of people would say, these cryptocurrencies, particularly meme coins, don't really have any kind of value. But, you know, popularity is driving the value of these things. And it sort of flies in the face of the larger crypto economy.

- Yeah and having Elon Musk tweet about it has been a big boost for Doge throughout the year. Although, the fact that he has accepted it now for Tesla merch really hasn't given it a juice since. And if you bought Doge, as you said, when he hosted SNL, you'd still be off about 3/4.

But, of course, a lot of the attention has shifted to some of those other meme coins you mentioned there, including Shiba. And I do wonder how big of a kind of event it is where it's just stealing kind of some of the momentum from Bitcoin and whether some of that could come back. Because you look at Bitcoin's dominance, David, over the last year, it's come down quite a bit in terms of its share of the overall crypto market cap, as some of the enthusiasm has kind of shifted into these meme coins. We see that kind of back and forth. But the trend line has been Bitcoin's losing out to a lot of these others.

DAVID HOLLERITH: Yeah, Zach. I totally agree with that. I think that in terms of Bitcoin losing market share, I think more of the concern would be for these smart contract platforms. But, again, I think Bitcoin has somewhat more of a competitive moat being in that it's sort of the first. And it has this store of value narrative relative to these other blockchains that are trying to do multiple other things.

Now the meme coins in general, they sort of break the credibility, I think, in terms of cryptocurrency as a whole, what it means to the average person. But I don't think it takes away a lot. I think that a lot of the traders who are interested in Shib and Doge aren't necessarily the people who are building things for Bitcoin or these other applications or blockchains. So I'm sort of hesitant to say that it's-- I think more than anything, it's a credibility breaker.

- Yeah. Love them or hate them, it's brought a lot of attention to crypto, has us talking about it yet again here as one of those top stories of the year. Of course, a lot of people have made money on the run up. Not sure if anyone timed the top, but David Hollerith bringing us a closer look there at Dogecoin. Appreciate that.