Traders are making 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 mania surrounding dogecoin, which was started as a joke and designed to serve no purpose, has caused the price to rise by more than 8,000% this year. By comparison, the S&P 500 has yielded about 1,900% over the past three decades, including dividends.
The cryptocurrency traded at about 43 cents on Monday, after hitting a record 45 cents on Friday. It started the year by less than 1 cent.
The recent dogecoin rush is driven by users sharing memes and tweets on Twitter and Reddit forums.
Its steep rise means that the market values the cryptocurrency more than $ 50 billion, or more than Ford Motor Co.
at Marriott International Inc.
If traders reach 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 comes with a broader rally in cryptocurrencies. This was partly driven by stimulus tests, which gave impetus to the so-called all-around march on financial markets. The listing of the exchange operator Coinbase Global Inc.
increased the focus on digital assets and pushed prices of cryptocurrencies such as bitcoin and ether to record highs last week.
Cryptocurrencies tend to be volatile and tend to double-digit percentage fluctuations in one day. The sharp rise of recent days raises concerns that speculative bets are contributing to their volatility. A drop in the price of dogecoin or bitcoin could lead to hedge funds and other large investors reducing risky holdings and contributing to a wider sale that will sting new and inexperienced investors.
“A lot of people who come in haven’t been around that long and haven’t seen bitcoin crash,” said Robert Drach, an asset manager at Drach Advisors in Tallahassee, Fla. He oversees investments for individual clients.
‘[The rise in dogecoin] feels to me like a bubble. ‘It is always worrying for me, not only for dogecoin investors, but also ordinary equity investors,’ said Mr. Drach said.
On Sunday, bitcoin fell by more than 10% due to speculation that the treasury department is considering taking action against some institutions over money laundering using cryptocurrencies.
Stimulus checks and low borrowing costs, which have caused shares to skyrocket in recent years, have probably also contributed to the rise in dogecoin, said Mr. 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 drives it up.” he said.
Traders said they started promoting ‘Doge Day’ on Tuesday after seeing a new advertising campaign on Twitter from Conagra Brands Inc.’s
Smart Jim account. The snack food brand, which regularly uses memes to draw attention online, said it planned to launch DogeSlimJim on Tuesday and urged the “DogeArmy” to spread the word. His report was plastered with memes of the Shiba Inu dog that inspired the creation of dogecoin.
Lanie Friedman, a spokeswoman for Conagra, said the brand plans to launch a doge-inspired digital product. She declined to provide further details and said Slim Jim’s campaign was not related 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 bought dogecoin for the first time on February 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 close to 39 cents.
“I am very confident that it will probably reach at least $ 1 on Tuesday,” he said. Becker said in an interview. “Even if you throw in $ 100 dollars, you can double your money. I do not want anyone to make a risky investment. I just want everyone to get a piece of the pie. ‘
Following tweets from Elon Musk and Snoop Dogg, dogecoin reached market value of $ 10 billion. WSJ looks at why online investors are pouring money into the virtual currency. (Video from 2/9/21)
Newcomers piled up dogecoin to such an extent last week that traders in the popular app Robinhood Markets Inc. experiencing problems executing transactions. Between Thursday and Friday, the exchange of Payward Inc., Kraken, reached the average of 30 days for dogecoin 71 times.
The recent rally has made dogecoin one of the top five cryptocurrencies by market value.
About 129.2 billion dogecoin were in circulation, according to CoinDesk on Monday. Every day, computers solve mathematical 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 by [email protected]
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