The past ten days have been nothing short of impressive for Dogecoin (DOGE), which surged more than 500% to a new high of $ 0.45. Even after a 15% correction, the powerful rally catapulted Dogecoin’s market cap above established financial institutions such as ING, Barclays and Credit Agricole.
The meme-driven cryptocurrency was pushed higher by multiple Twitter posts from Elon Musk, the CEO of Tesla and SpaceX, and the second richest person in the world. Musk isn’t the only billionaire businessman backing the cryptocurrency.
Whether there are fundamentals behind the rapid price hike, Dallas Mavericks owner Mark Cuban has also publicly defended DOGE. The professional basketball team even accepts it for merchandise sales.
Is Dogecoin Worth More Than Citigroup or Morgan Stanley?
While the Dogecoin community is constantly striving for the $ 1 goal, many fail to recognize that the current 129.6 billion supply will grow 20% in 5 years. So $ 1 per DOGE would result in a market cap of $ 156 billion, or doubling the current Binance Coin (BNB) valuation.
To show how outrageous the proposed $ 1 target is, there are currently 92 tradable assets with a market cap of $ 156 billion. Citigroup (C), Morgan Stanley (MS), Unilever (UL), and Shell (RDS.A) are all $ 150 billion market cap companies and would therefore be under Dogecoin if its fan base somehow manages to push its value up $ 1.
It’s worth noting that institutional investors can open short positions and bet on a drop in the price of those assets, while Dogecoin futures are not available to US-based traders. Neither are listed on CME nor BAKKT, meaning betting against DOGE is not an option for professional traders.
Inefficiencies will fade as markets evolve
As the cryptocurrency market grows, institutionally focused exchanges will offer altcoin derivatives, creating a more efficient market. Meanwhile, comparing Dogecoin’s market cap to more established banks is yielding biased numbers.
While some argue that new regulations are needed to avoid these inefficiencies, it should be remembered that Gamestop’s (GME) shares rose by more than 860% in January.
While Gamestop was unable to turn a profit for the past six years, the tremendous frenzy caused by social network-coordinated investments pushed its market capitalization above $ 24 billion, which is higher than that of the National Bank of Canada (NA. TO).
In theory, no intelligent investor would deliberately choose Gamestop over a bank that consistently generates more than CAD 2 billion a year in profits. Nevertheless, market inefficiencies will cause temporary disruptions.
Likewise, Dogecoin investors can make history by hitting $ 1, but this valuation is unlikely to hold up as institutional traders go short on instruments.
The views and opinions expressed here are solely those of the author and do not necessarily reflect Cointelegraph’s opinion. Every investment and trade move carries risks. You should do your own research when making a decision.