Traders are causing a “Doge Day” frenzy on online forums to push the price of even cryptocurrency towards $ 1, yet another sign of overheating in parts of the market.
The dogecoin craze, which was started as a joke and designed to be wasted, has pushed the price up by over 8,000% this year. By comparison, the S&P 500 has generated around 1,900%, including dividends, over the past three decades.
The cryptocurrency traded up to around 43 cents on Monday, after hitting a record high of 45 cents on Friday. He started the year with less than 1 cent.
The recent dogecoin rush is propelled by users sharing memes and tweets on the Twitter and Reddit forums.
Its steep rise means the market values the cryptocurrency at over $ 50 billion, more than Ford Motor Co.
and Marriott International Inc.
If traders hit their target of pushing the price to $ 1 by Tuesday, it could be worth more than blue chip companies like Advanced Micro Devices. Inc.,
CVS Health Corp.
and General Motors Co.
The rise of Dogecoin is accompanied by a broader rally in cryptocurrencies. It was in part fueled by stimulus checks, which gave new impetus to the so-called recovery of everything in the financial markets. The listing of exchange operator Coinbase Global Inc.
has drawn increased attention to digital assets and pushed the prices of cryptocurrencies such as bitcoin and ether to record highs last week.
Cryptocurrencies tend to be volatile, subject to double-digit percentage changes in a single day. The sharp rise in recent days is raising concerns that speculative betting is adding to their volatility. A sharp drop in the price of dogecoin or bitcoin could prompt hedge funds and other large investors to cut risky holdings and contribute to a wider sell-off that would sting new and inexperienced investors.
“A lot of people who come in haven’t been around that long and haven’t seen the bitcoin crash,” said Robert Drach, asset manager at Drach Advisors in Tallahassee, Fla. He oversees investments for individual clients.
“[The rise in dogecoin] seems like a bubble to me. This still concerns me, not only for dogecoin investors, but also for regular equity investors, ”Mr. Drach said.
Bitcoin fell more than 10% on Sunday on speculation that the Treasury Department was considering taking action against some institutions for money laundering using cryptocurrencies.
Stimulus checks and low borrowing costs that have driven stocks higher over the past year have likely also helped dogecoin rise, Drach said.
“I don’t think you can just sit there and make a ton of money in your S&P 500 ETF and then look at the dogecoin folks and laugh, because it’s the same liquidity that’s pumping it up. he said.
Traders said they started promoting as “Doge Day” on Tuesday after seeing a new Twitter ad campaign from Conagra Brands. Inc. of
Slim Jim account. The snack brand, which frequently uses memes to gain attention online, said it plans to launch something called DogeSlimJim on Tuesday and urged the “DogeArmy” to spread the word. His tale was covered with memes of the dog Shiba Inu that inspired the creation of the dogecoin.
Lanie Friedman, spokesperson for Conagra, said the brand plans to launch a digital product inspired by the doges. She declined to provide further details and said that Slim Jim’s campaign was unrelated to the value of dogecoin.
Shaun Becker, who lives in Phoenix, started promoting “Doge Day” on his Twitter account after reading Slim Jim’s tweets. The 36-year-old risk and compliance analyst said he first bought dogecoin on February 8, as celebrities such as Tesla chief executive Elon Musk and rapper Snoop Dogg, were promoting it. Mr Becker’s investment of $ 1,179.42 in dogecoin was worth $ 4,477 on Monday, when the dogecoin traded close to 39 cents.
“I’m very confident that on Tuesday it will probably hit at least $ 1,” Becker said in an interview. “Even if you throw away $ 100, you can double your money. I don’t want anyone to make a risky investment. I just want everyone to have a piece of the pie.
Newcomers have crammed into dogecoin so much in the past week that traders on the popular Robinhood Markets Inc. app have struggled to execute trades. Between Thursday and Friday, Payward Inc.’s exchange, Kraken, recorded dogecoin volumes 71 times the 30-day average.
The recent rally made dogecoin one of the top five cryptocurrencies in terms of market value.
About 129.2 billion dogecoins were in circulation on Monday, according to CoinDesk. Every day, computers solve math puzzles to unlock new rooms. Unlike bitcoin, dogecoin has no limit to the total number of coins that can exist.
Write to Caitlin Ostroff at [email protected]
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