“As Internet technology grows, online transactions are becoming more and more popular. Thus the emergence and development of virtual currency are inevitable and predictable.” Natalie Warb, the financial expert of an online coupon-providing site CouponBirds said. First launched in 2013, Dogecoin is a kind of open-source digital currency, mainly using the Scrypt algorithm. It was first created just for making fun of the virtual currency, and the logo of Dogecoin is the icon of the famous funny pic of the Japanese meme of a Shiba Inu.

Though Dogecoin has been around for a long time, the price didn’t rise significantly until 2021. According to the data from Global Data, before Dec 2020, the price of dogecoin remained in a very stable state, with the lowest price of $0.0000869 per Dogecoin and the highest per Dogecoin reached before 2021 was only $0.01. However, starting in Dec 2020 and Jan 2021, the price of Dogecoin skyrocketed dozens of times. The highest price ever recorded for Dogecoin was $0.682 in May 2021, which is almost one thousand times the highest price before 2021.

Why did Dogecoin spike in 2021, which made it one of the world's most famous cryptocurrencies from just a kind of coin out of joking memes? Elon Musk was one great reason for all. Before Dogecoin really hit the scene, Elon Musk started to show unusually high interest in Dogecoins.

Since 2019, when Dogecoin was still unfamiliar to most people, Elon started to tweet about Dogecoin and tag it constantly on Twitter. Also, using his influence on Twitter, he made a lot of advertising moves for Dogecoin as if a store tweeted about Dogecoin publicly, this tweet will get promoted in the information flow and would be seen by more Twitter users. This strategy worked. Many stores and influencers tweeted about Dogecoins just to get more traffic and exposure to their accounts and get more followers. What’s more, many influencers would post something absurd, exaggerated and ridiculous about Dogecoin just to attract more attention and hype this topic.

This worked. What Elon did for Dogecoin is a successful hype. In the case that many people did not understand cryptocurrency, a great scope of hype and promotion has greatly raised people's interest in Dogecoin. Besides, the icon of the funny “Doge” is also more accessible and attractive to the audience. Once people started to become curious, the rest would follow. Mike Bucella, a general partner at BlockTower Capital, a crypto asset investment firm, once said that because of the antics of Elon Musk, Dogecoin had been trading in the top levels in the great Twitter hype in 2021, and its market capitalization had reached to a peak of over $63 billion. “If the richest man in the world believes and is willing to invest in a kind of coin that is named after a dog, why not have a try?” a loyal Twitter user once said.

At the end of last May, many people predicted that the Dogecoin and meme economy was about to take off. But did it go as people expected?

Turns out no, Dogecoin is not taking a rocket, instead, it is taking a roller coaster. When first launched in 2013, Dogecoin was issued in limited quantities at the time, with 100 billion coins. However, Dogecoin currently has an infinite inflationary supply with a $5 billion doge per year, which creates a risk of inflation. On May 9th, 2021, Elon Musk guested on Saturday Night Live and said that Dogecoin was “created as a joke” and a “hustle”, which made the audience lose confidence in it, and the price of Dogecoin reduced by about 24% in only one day.

Besides, there are a lot of elements that make the price of Dogecoin continue to fall after the absurd rise in the first half of 2021. After the initial turmoil passed, many financial giants said that the public needs to “carefully consider” whether to invest in Dogecoin. Many countries, like China, have announced that they will launch digital currency from their national bank - People’s Bank, and forbid the use and trading of cryptocurrencies, which also caused a negative atmosphere in the world of cryptocurrency trading.

Just in the first two weeks of June 2021, the market value of Dogecoin had dropped from about $92 billion to about $46 billion. In October 2021, its market value dropped to only $32B. The extremely high instability of cryptocurrency has greatly affected people's confidence in it. As a newly emerging field, cryptocurrency does not have a mature market rule and a transaction mode, which creates its volatility, the lack of regulation surrounding it, and frequent and rampant scams. Many predict that as the negative impact of the pandemic continues and economic conditions fluctuate, the price of cryptocurrency like Dogecoin will probably continue to fall down. Thus, in the long run, it doesn’t seem to be a solid investment.