By Justina Lee, Joanna Ossinger
For anyone who still thinks Dogecoin is a joke, there are some 90 billion reasons that say it’s not.
That’s how much the digital token is nearly worth in dollar terms after jumping again in Wednesday trading. Useless or not, the coin has been swept up in the crypto mania that’s gripped markets awash in central bank largesse.
It’s the latest milestone in a year of speculative excesses for a market Nouriel Roubini once described as “the mother of all bubbles.” While in the past, trillions of dollars in stimulus by governments and central banks might have triggered a rush into gold for the inflation-wary and risky stocks for the intrepid, a deluge of cash this time round is flooding into the nascent crypto market.
Few illustrate this better than Dogecoin, a so-called memecoin that’s become the destination for a horde of day traders egged on by Internet buzz and a self-propelling buying frenzy. A potential trigger for the latest leg up: Tesla co-founder and crypto fan Elon Musk is appearing on Saturday Night Live this weekend, spurring speculation he may talk up Dogecoin again on the comedy show.
“When you think about the full spirit of what this crypto revolution is, there’s something pure in what Dogecoin has done,” Mike Novogratz, founder of Galaxy Digital Holdings, said on CNBC. “I worry that once the enthusiasm rolls out, there are no developers, there’s no institutions coming in. But it’s got the moniker of the people’s coin right now and it’d be very dangerous to be short.”
The overnight gain took Dogecoin’s one-week advance to 118% and its value to $87 billion in Wednesday trading, according to CoinMarketCap.com data, eclipsing the largest exchange-traded gold fund and even stocks like Fedex Corp. and Snap Inc. A year ago, the asset was worth just $315 million.
It’s all the more remarkable given that other retail favorites from bullish stock options to Cathie Wood’s tech fund have all seen activity dip from the highs earlier this year.
Now, cryptomania might even be hurting gold, according to some analysts. The precious metal has suffered outflows in recent months even as a deluge of stimulus cash drove the value of the world’s crypto market to a $2 trillion record.
“At some point, something is just real,” said Sam Bankman-Fried, the Hong Kong-based chief executive officer of the FTX crypto exchange. “If Dogecoin is stupid and valueless, it shouldn’t be worth $90 billion. How about gold or Bitcoin or euros? Our collective imagination has given them value, and now we just think about them having value.”
Dogecoin, started in 2013 as a joke based on the Shiba Inu breed of dog, may become so accepted by the mainstream it might evolve into a payment option at retailers, Bankman-Fried said. At Blockfolio, a firm owned by FTX that helps users manage their crypto portfolios, trading volumes are spiking with Dogecoin’s every gain, a sign it’s become essential to the whole ecosystem.
Dogecoin buying got so fevered Tuesday, Robinhood’s trading app briefly crashed. Other so-called altcoins surged, with Dash spiking 11% over a 24-hour period through the New York morning on Wednesday and Ethereum Classic rising 25%.
While it’s difficult to assign firm reasons to Dogecoin’s ascent, a few factors have fueled the gains. On April 20, a day normally associated with pot, some users got #DogeDay trending to push up the price. Celebrities from Musk to the Dallas Mavericks’ billionaire owner Mark Cuban also jumped on the bandwagon. The Gemini crypto exchange backed by the Winklevoss twins announced Tuesday it will soon enable trading of the coin.
“As the economy reopens, a lot of these Covid-related movements in various assets will experience some volatility,” said Tony Bedikian, head of global markets at Citizens Bank. “But I think they are going to become a permanent part of the currency markets as central banks have continued to print money at astronomical levels.”