After a massive 15 percent rise on Friday, Dogecoin price took a steep 5.7 percent nosedive on Sunday as of time of writing.
Dogecoin value further dropped later Sunday, and it is currently plummeting by 4.26 percent, according to the CoinMarketCap real-time tracker.
What Caused Dogecoin Price Drop?
Why the sudden turn of fortunes for the Dogecoin price today? The sell-off is primarily due to profit taking from investors following the coin's recent gains, The Motley Fool said on a report on the Nasdaq website.
Dogecoin had reached its peak in last week's rally on Friday after Tesla CEO Elon Musk announced that the automaker would now accept the digital token as a payment option. And, just like any booming asset, Dogecoin had taken a breather from its bull run.
In contrast, as further CoinMarketCap figures show, Bitcoin and Ethereum had been roughly flat over the last 24 hours, with the world's top cryptocurrency climbing a mere 0.05 percent to $43,146.90. Ethereum, on the other hand, increased 0.80 percent to $3,354.71.
Despite Dogecoin's collapse over the 24-hour period, it is still up 17.59 percent over the last seven days, driven by Tesla's acceptance of the cryptocurrency as payment for its merchandise. This is due to Musk's passionate support for Dogecoin for the longest time. He had expressed his backing for DOGE through his widely followed tweets and other channels.
Musk's comments have always led to skyrocketing value for Dogecoin, with observers labeling him as the "Dogefather."
Musk previously tweeted a hint that Tesla could soon accept Dogecoin to pay for the automaker's products, and this led to Dogecoin soaring 25 percent on January 14. There have been no developments or external factors that could have caused DOGE to stumble on Sunday, but this is not surprising after its week-long rise.
Dogecoin Still a Stellar Performer, Growing 1,900% Year-on-Year
Even with its value crashing around 75 percent from its all-time high in May last year amid striking volatility in the broader cryptocurrency market and other factors affecting its price, Dogecoin still rose to an astonishing 1,900 percent year-on-year.
While it began as a joke cryptocurrency as an apparent spoof to Bitcoin, Dogecoin had delivered mind-blowing returns for long-term investors who went in even before the token's massive surge. Dogecoin presently has a market capitalization of $23.507 billion, ranking as the 11th largest cryptocurrency.
Dogecoin relies on its coin adoption and speculation, as a result of mostly social media hype and community support. As more companies accept Dogecoin as a payment option for merchandise--such as Musk's Tesla and fellow billionaire Mark Cuban's NBA team Dallas Mavericks--or a spike in the number of trading platforms that would start providing investors the option to buy and sell the token, Dogecoin could even skyrocket further.
But investors should be cautioned about how Dogecoin is basically a high-risk investment, and volatility should be expected. Thus, they should only invest in the token what they can afford to lose in the near-term.
Related Article: Dogecoin Price Prediction: Elon Musk Believes DOGE Is 'Better' Than Bitcoin
