Why Dogecoin price rises as Bitcoin reaches record high

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When Bitcoin (BTC) price rises, it often increases the worth of other cryptocurrencies as well, including Dogecoin.
This is because some investors see smaller cryptocurrencies like Dogecoin as a cheaper alternative to Bitcoin, specifically as a shorter-term investment, and take advantage of the often volatile peaks and troughs.
Bitcoin has experienced a significant surge in 2021, buoyed by backing from the likes of Tesla and PayPal.
Tesla announced in February that it had bought $1.5 billion worth of Bitcoin, while PayPal is now enabling people to use the cryptocurrency to buy and sell on its platform.
Mastercard aims to start supporting Bitcoin payments later this year as well.
Bitcoin opened the year at around £21,000, having spent most of 2020 below £10,000. It reached £40,000 in February and briefly crashed, before rising again.
Dogecoin started the year priced at just $0.005, before its price shot up in late January, partly influenced by Elon Musk’s twitter posts and the GameStop surge.
About Dogecoin: Dogecoin is the name of a joke cryptocurrency which was inspired by the Internet’s famous Doge meme. Last week, its value increased sharply thanks to the mass effort of stock market dabblers and social media users. Launched in Dec 2013 by Billy Markus, an American software engineer, this cryptocurrency currently counts a community of some 336,200 people.
So the Dogecoin doesn’t really have any economic value, however, as the Cryptoast website explains, it can be used principally as a means of payment for giving tips to content creators on the Internet.

What could happen next?

Many analysts are bullish about Bitcoin’s future, which is also good news for Dogecoin.
Simon Peters, analyst at investment platform eToro, said: “The dynamics have changed quite dramatically this year. Demand is flooding the market from institutions just as large amounts of Bitcoin and Ethereum are increasingly being taken offline and holders are transferring them to their own wallets.
“There is only one outcome from that, and investors should expect higher highs and higher lows throughout the year.
“In the short-term, we may soon see some profit-taking from some investors – a common theme that occurs when Bitcoin or its peers hit record peaks – but the long-term trend remains solid, with demand for alternative investments continuing.”
Coinbase, one of the largest cryptocurrency trading platforms, is currently preparing to go public. This could rises Bitcoin’s value, and other cryptocurrencies like Dogecoin, analysts believe.
Nick Spanos, co-founder of smart contract platform Zap.org, said: “The upcoming public debut of Coinbase is particularly exciting to both the mainstream market investors as well as crypto market enthusiasts.
“While the former will have a more direct opportunity to buy the shares of a company that plays a central role in Bitcoin and the crypto space, the latter are excited as Coinbase will open the gates for more conservative investors to embrace the coin, and perhaps other digital assets.”
However, it is worth remembering that cryptocurrencies are extremely volatile, and can be a risky investment.
An advert for crypto exchange Coinfloor was banned by the Advertising Standards Authority last month for suggesting buying Bitcoin was a secure way to invest.

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