Traders are sparking the “Dog Day” frenzy on online forums to push the price of the meme cryptocurrency to $ 1, in an additional sign of overheating in some parts of the market.
The mania around the dogecoin, which was started as a joke and designed to serve no purpose, sent the price rising by over 8,000% this year. In comparison, the S&P 500 has generated about 1,900%, including dividends, in the last three decades.
The cryptocurrency traded up to about 43 cents on Monday, after recording a record 45 cents on Friday. The year started worth less than 1 cent.
The recent rush in dogecoin is driven by users who share memes and tweets on Twitter and Reddit forums.
Its steep rise means the market values the cryptocurrency at more than $ 50 billion, or more than Ford Motor Co.
and Marriott International Inc.
If traders hit their target of raising the price to $ 1 by Tuesday, it could be worth more than blue-chip companies like Advanced Micro Devices Inc.,
CVS Health Body.
and General Motors Co.
The rise of Dogecoin comes with a wider rally in cryptocurrencies. This was partly driven by stimulus controls, which added momentum to the so-called financial market rally. Coinbase Global exchange operator listing Inc.
drew more 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, prone to double-digit percentage fluctuations in a single day. The sharp rise in recent days raises concerns that speculative bets add to their volatility. A precipitous drop in the price of dogecoin or bitcoin could cause hedge funds and other large investors to reduce risky holdings and contribute to a wider sale that would sting new and inexperienced investors.
“A lot of people who come in haven’t been around long and they haven’t seen bitcoin crash,” said Robert Drach, an asset manager at Drach Advisors in Tallahassee, Florida. He oversees investments for individual clients.
“[The rise in dogecoin] it feels like a bubble. That always concerns me, not only for dogecoin investors, but also for ordinary stock investors “, said Mr. Drach.
On Sunday, Bitcoin fell by more than 10% on speculation that the Treasury Department is weighing in against money laundering institutions using cryptocurrencies.
Incentive checks and low borrowing costs that have increased stocks over the past year have likely also contributed to dogecoin growth, Drach said.
“I don’t think you can sit there and make a lot of money in your S&P 500 ETF and then look at the dogecoin people and laugh, because it’s the same liquidity that’s pumping it.” he said.
Traders said they started promoting Tuesday as “Doge’s Day” after seeing a new Twitter ad campaign from Conagra Brands Inc.
Slim Jim account. The snack brand, which frequently uses memes to get attention online, said it plans to launch something called DogeSlimJim on Tuesday and urged “DogeArmy” to spread the word. His account was plastered with memes of the dog Shiba Inu which inspired the creation of the dogecoin.
Lanie Friedman, a spokeswoman for Conagra, said the brand intends to launch a doge-inspired digital product. She declined to give further details and said Slim Jim’s campaign had nothing to do with the value of the dogecoin.
Shaun Becker, who lives in Phoenix, began promoting “Doge Day” on his Twitter account after seeing tweets from Slim Jim. The 36-year-old risk and compliance analyst said she first bought dogecoin on Feb. 8, as celebrities such as Tesla CEO Elon Musk and rapper Snoop Dogg promoted it. Mr. Becker’s $ 1,179.42 investment in dogecoin was worth $ 4,477 on Monday, when dogecoin traded nearly 39 cents.
“I am very confident that it will probably reach at least $ 1 on Tuesday,” Mr 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 get a piece of the pie. ”
After tweets from Elon Musk and Snoop Dogg, the dogecoin exceeded the market value of 10 billion dollars. WSJ examines why online investors invest money in virtual currency. (Video from 09.02.21)
Newcomers piled up in dogecoin to such an extent last week that traders in the popular Robinhood Markets Inc. app. had problems with the execution of transactions. Between Thursday and Friday, the Payward Inc. exchange, Kraken, recorded volumes for dogecoin 71 times higher than the 30-day average.
The recent rally has made dogecoin one of the top five cryptocurrencies by market value.
About 129.2 billion dogecoins were in circulation on Monday, according to CoinDesk. Every day, computers solve math puzzles to unlock new coins. Unlike bitcoin, dogecoin has no limit to the total number of coins that can ever exist.
Write to Caitlin Ostroff to [email protected]
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