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Dogecoin’s 14,000% rally helps it eclipse XRP to become the 4th-largest cryptocurrency | Currency News | Financial and Business News

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Dogecoin started as a joke in 2013.

Dogecoin is now the fourth largest cryptocurrency by market capitalization, according to data from CoinMarketCap.

A 14,000% year-to-date rally has pushed the meme-inspired cryptocurrency to a market capitalization of over $85 billion, surpassing Ripple’s nearly $71 billion market cap.

The latest move up in the Dogecoin came on Tuesday, when the cryptocurrency surged more than 60%, likely in anticipation of Elon Musk’s SNL appearance this weekend according to one analyst, who has been a longtime supporter of the cryptocurrency and dubbed it Cryptography of people.

Now, only 3 cryptocurrencies are bigger than Dogecoin. Binance is worth $99 billion, Ethereum is worth $388 billion, and Bitcoin is worth over $1 trillion.

The increase in cryptocurrencies accelerated in 2021, with Bitcoin up more than 80% YTD and Ethereum up more than 300%. Many investors bidding on cryptocurrencies see it as a way to hedge against inflation as the Federal Reserve prints money and Congress spends the money to help spur economic recovery from the COVID-19 pandemic.

But not everyone buys the argument for an inflation hedge. Analysts from Bank of America argued that the only reason to buy cryptocurrencies is for higher prices, not diversification or hedging.

“Looking at each year, we find that Bitcoin is positively correlated with CPI inflation in 5 out of the last 9 years, with the largest correlations in 2014 and 2018…But when we look at correlations with inflation surprises since 2011, BofA explained that Bitcoin It has among the least common movements, lagging behind most asset classes such as commodities, TIPS and EM FX in particular.”

Investors likely will not buy Dogecoin as an inflation hedge because it does not have a fixed supply. Instead, it is an inflationary currency, with 5 billion new Dogecoins hitting the market every year. This lends credence to the idea that investors are bidding on dogecoin more as a joke, or in speculation of further price hikes.

Read more: James Wang, a former Arc analyst, breaks down his bull case for Ethereum as its token breached an all-time high of $3,300 — and explains why it eventually hit $40,000

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