Dogecoin briefly surged to an all-time high of 69 cents Wednesday morning, capping a roller-coaster run for the meme-based cryptocurrency that has skyrocketed in value in recent months.
The latest rally has come in the lead-up to Tesla CEO Elon Musk hosting NBC's "Saturday Night Live" this weekend. Musk has long praised the digital token to his 52 million Twitter followers, and some speculate that a mention of dogecoin on national television could spark even more demand.
If you bought dogecoin at the beginning of the year you've enjoyed massive gains over the past four months. A $1,000 dogecoin purchase on Jan. 1, 2021 — at a price of less than a cent per coin — would be worth $121,052 at Wednesday's high of 69 cents, a gain of more than 12,000% according to CNBC calculations.
That's significantly more than other cryptocurrencies like bitcoin and ether, which grew 95% and 369% over the same time period, respectively. A $1,000 bitcoin purchase would be worth $1,953.88 as of Wednesday, while ether would be worth $4,686.58.
But before you buy dogecoin in hopes of capitalizing on the gains, it's important to remember that popularity and reliability don't necessarily go hand in hand, and many have warned of the bubble potential of dogecoin. When it comes to a token like dogecoin whose value is extremely volatile, don't invest any money that you aren't prepared to lose entirely.
"My guess is that [the rally] won't last, especially for something like dogecoin which was never meant to be a payment system or a store of value," Adam Zadikoff, chief operating officer at BRD, a popular crypto wallet that boasts more than 7 million users, told CNBC Make It last month. "Yes, you can make a quick buck if you time it right, but timing the market is a terrible thing to try to do. It does not work."
Many crypto novices don't understand the difference between the respective price increases of bitcoin and dogecoin. While bitcoin has economic incentives built in for miners to continue to create new bitcoin and there is a hard cap of 21 million bitcoin that will ever be able to exist, dogecoin has no such infrastructure. Instead, it has been fueled by excitement on Twitter and Reddit threads.
"You see the power in social media to move people to do something en masse," Zadikoff says of dogecoin. "This is the flash-in-a-pan thing that people are getting behind right now."
Disclosure: "Saturday Night Live" is a TV show of NBCUniversal, the parent company of CNBC.