In Wall Street Warriors, students write about important aspects of the finance field as well as news in the stock market. This week, sophomores Bennett Szafranski and Spencer Lehmann discuss the current state of Cryptocurrency and how it affects the market.
In recent months, the belief that a Cryptocurrency bubble exists has grown. For those that do not know, Cryptocurrency is a digital asset that is designed to work as a form of currency. In simpler terms, it is pretty much digital money with no physical item. Since the start of the pandemic, several cryptocurrencies like Bitcoin, Ethereum, Dogecoin, and many others have gained a lot of attention. Social media platforms such as Reddit, TikTok, and Discord have been promoting these currencies. Additionally, since everyone had so much free time because of the pandemic, many began to invest; with the influence of social media platforms, new investors have turned to cryptocurrencies.
Unlike Bitcoin or Ethereum, Dogecoin is more of a meme cryptocurrency as most of the people buying it are just doing it as a joke. The cryptocurrency itself is considered very volatile and unpredictable. Over the summer, a viral TikTok said that if everyone bought Dogecoin they would be able to boost the price and make money. At the time, Dogecoin was worth $0.002, but as more investors got involved the price spiked; it is now worth twenty-five cents, nearly a three thousand percent return on their initial investment.
In addition to specific Cryptocurrencies, Coinbase, a cryptocurrency exchange platform, has been excelling because of its popularity. Coinbase was even able to become a publicly traded stock on the Nasdaq due to its eighty-five billion-dollar valuation. As of now, Coinbase is trading at three hundred and twenty dollars with a fifty-nine billion dollar market capitalization. Furthermore, companies including Tesla, Burger King, and Microsoft, have started accepting Bitcoin as a form of payment, with The Miami Dolphins and Dallas Mavericks following behind.
Many believe that crypto is the future and, as a result, Coinbase will eventually make a huge profit. Others believe we are in a bubble that will eventually pop: That all Cryptocurrencies might be currently overvalued, and the value of these currencies will end up going down.