Traders are driving a “Doge Day” frenzy on online forums to push the price of the meme cryptocurrency to $ 1, in a further sign of overheating in parts of the market.
The dogecoin mania, which started as a joke and was meant to serve no purpose, has pushed the price up more than 8,000% this year. In comparison, the S&P 500 generated about 1,900%, including dividends, over the past three decades.
The cryptocurrency traded at around 43 cents on Monday, after hitting a record 45 cents on Friday. It started the year with a value of less than 1 cent.
The recent rush for dogecoin is propelled by users sharing memes and tweets on Twitter and Reddit forums.
The steep rise means the market values the cryptocurrency at over $ 50 billion, or more than Ford Motor Co.
and Marriott International Inc.
If traders reach their goal of hitting 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.
Dogecoin’s rise has been accompanied by a broader rally in cryptocurrencies. It was driven in part by stimulus controls, which gave impetus to the so-called all-rally in financial markets. Coinbase Global stock exchange listing Inc.
increased attention to digital assets and pushed the prices of cryptocurrencies such as bitcoin and ether to record highs last week.
Cryptocurrencies are generally volatile, prone to double-digit fluctuations in one day. The sharp rise in recent days raises concerns that speculative bets are increasing their volatility. A sudden drop in the price of dogecoin or bitcoin could spur hedge funds and other major investors to cut risky stakes, and contribute to a wider sell-off that would sting new and inexperienced investors.
“A lot of people who come in have not been there long and haven’t seen bitcoin crash,” said Robert Drach, an asset manager with Drach Advisors in Tallahassee, Florida. He oversees investments for individual clients.
[The rise in dogecoin] feels like a bubble to me. That’s always a concern to me, not just for dogecoin investors, but for mainstream equity investors, ”said Mr. Drach.
On Sunday, bitcoin fell more than 10% following speculation that the Treasury Department was considering taking action against some institutions for money laundering using cryptocurrencies.
Incentive controls and low funding costs that have pushed stocks up over the past year have likely contributed to the rise in dogecoin as well, Mr. Drach said.
“I don’t think you can sit there and make a ton of money in your S&P 500 ETF and then look at the dogecoin people and laugh because it’s all the same liquidity pumping it up.” he said.
Traders said they started promoting Tuesday as “Doge Day” after seeing a new ad campaign on Twitter from Conagra Brands Inc.’s
Slim Jim account. The snack food brand, which regularly uses memes to grab attention online, said it planned to launch something called DogeSlimJim on Tuesday and urged the “DogeArmy” to spread the word. His account was plastered with memes of the Shiba Inu dog who inspired the creation of dogecoin.
Lanie Friedman, a Conagra spokeswoman, said the brand was planning to launch a doge-inspired digital product. She declined to provide further details, saying 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 seeing tweets from Slim Jim. The 36-year-old risk and compliance analyst said he first bought dogecoin on Feb. 8, when celebrities like Tesla Chief Executive Elon Musk and rapper Snoop Dogg promoted it. Mr. Becker’s $ 1,179.42 in dogecoin was worth $ 4,477 on Monday, when dogecoin was trading close to 39 cents.
“I am confident it will likely be at least $ 1 on Tuesday,” said Mr. Becker in an interview. “Even if you throw $ 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, dogecoin reached a market value of $ 10 billion. WSJ looks at why online investors are depositing money in the virtual currency. (Video 2/9/21)
Newbies piled so much into dogecoin last week that traders on the popular Robinhood Markets Inc. had difficulty executing transactions. Between Thursday and Friday, Payward Inc.’s exchange, Kraken, saw volumes for dogecoin at 71 times the 30-day average.
The recent rally has made dogecoin one of the top five cryptocurrencies by market value.
There were approximately 129.2 billion dogecoin in circulation on Monday, according to CoinDesk. Every day computers solve math puzzles to unlock new coins. Unlike bitcoin, dogecoin has no limit on the total number of coins that can ever exist.
Write to Caitlin Ostroff at [email protected]
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