While Coinbase Global Inc. Having garnered headlines at market launch, the frenzy surrounding digital tokens is hottest at the price of a token created as a joke.
Dogecoin, fueled by the likes of Elon Musk and Mark Cuban, jumped around 180% on Friday, according to CoinMarketCap.com, reaching a market value of more than $ 48 billion. It is now up 18,000% from a year ago, when it was trading for $ 0.002 and worth about $ 250 million.
Doge’s rise is part of a rise in altcoins, a term for all digital tokens that has sprouted up to mimic Bitcoin. Like most of them, its use case is limited, making it a tool for speculators and arousing fears that the ballooning in the crypto world is now worth more than 2. , 25 trillion dollars.
“This reminds me of the dot com days. We know something big is going on, a lot of investors are chasing it. That led to a bubble, ”said Scott Knapp, chief market strategist at CUNA Mutual Group. “For every Amazon.com, 10 pet.com goes bankrupt. Is Dogecoin the pet.com of the crypto era? “
Interest in cryptocurrencies is rebounding after companies from PayPal to Square started allowing Bitcoin transactions on their systems, and Wall Street firms like Morgan Stanley started providing access. tokens for some of the richest customers. All crypto hard-working people who say blockchain technology will stir the financial community that has been using cryptocurrencies, get rich in the process.
The Shiba-Inu-themed Dogecoin was created as a joke by software engineers Billy Markus and Jackson Palmer in 2013. Musk sparked a protest earlier this year when he posted a photo of a magazine. Dogue has a dog in a red sweater.
But Michael Novogratz, chief executive of Galaxy Digital Holdings, doesn’t buy the hype, because Dogecoin “doesn’t really have a purpose.”
“It’s reminiscent of GameStop,” he said in an interview with Bloomberg TV, referring to the meme stock craze that captured markets in February. “I would be very worried if one of my friends invested in Dogecoin at this price point.”
With very few cases of buying cryptocurrencies, the likelihood of them going insolvent remains high, leaving new traders starting to engage in the hype that is prone to heavy losses.
Michael O’Rourke, chief market strategist at JonesTrading said: “The government has pumped so much monetary and fiscal stimulus into today’s economy, even worthless assets are being appreciated. .
However, it’s hard to ignore the popularity of alt-coins. While Bitcoin is worth more than $ 1 trillion, the total market cap of the token universe has now exceeded $ 2.25 trillion, according to CoinGecko.com, which tracks more than 6,700 coins.
Bitcoin’s dominance in the crypto world has dropped 28% since the start of the year, according to Robbie Liu, an Analyst at OKEX Insights, citing data from Tradingview. Weakening influence begins to accelerate this month, he said in an email Friday and that Bitcoin currently accounts for less than 54% of the crypto market’s capitalization – its lowest level in almost two years.
“On the altcoin side, we continue to see strong momentum,” said Pankaj Balani, CEO of Delta Exchange, a leading cryptocurrency derivatives exchange. He noted Ether’s recent record and increased activity in the decentralized financial sector or DeFi, adding that “decentralized exchange currencies will be in focus over the next few days, given the market already confirm Coinbase at a $ 100 billion valuation. ”
Other tokens without fundamentals are also on the rise. Cardano and Polkadot, both among the top 10 cryptocurrencies by market capitalization, have rallied sharply this week.
Shashwat Gupta, founder of Altcoinbuzz.io, said: “Polkadot and Cardano currently have very few ‘users’, ” said in an email Wednesday, although he added that there is a huge amount of development going on. built upon them.
And it seems Coinbase CEO Brian Armstrong may have said something about it when he said post-listing that it marks a “change of legality” for cryptocurrencies.
Edward Moya, senior market analyst for North America at Oanda Corp, said: “Ultimately there will be more ‘use cases’ for cryptocurrencies and will keep the crypto market afloat.” .