What started as a ‘meme currency’ in 2013 suddenly surged over seven times its value in 24 hours last January 28. Dogecoin reached a market cap of $7 billion and landed the tenth position in the Coin Market Cap’s list.
Along with Ripple’s XRP, one of the leading cryptocurrencies in the market, Dogecoin caught the attention of crypto and stock market forums in Reddit including r/SatoshiStreetBets and r/WallStreetBets. This increased the demand for the cryptocurrency among amateur traders and thus causing the sudden surge in its price.
The rally behind Dogecoin can be traced back to Elon Musk, founder of Tesla Inc. In his tweet that features a photo of a dog, he mentioned that Dogecoin is his ‘fav cryptocurrency’. This piqued the curiosity of Redditor traders and the cryptocurrency’s value surged 50% an hour after Musk posted his tweet.
However, the sudden surge of Dogecoin’s value is short-lived as the cryptocurrency dropped to $0.022 two days after it hit its highest value of $0.078.
Redditors target cryptocurrencies after GameStop
According to latest cryptocurrency updates, Dogecoin and XRP spiked in value after Reddit traders plotted to ‘pump and dump’ the cryptocurrencies. Although the increase in value is short-lived, it still boosted the position of both cryptocurrencies in the global crypto market.
CoinSwitch Kuber co-founder and CEO Ashish Singhal thinks Dogecoin can have real value.
In a statement, Singhal said, ‘Dogecoin is a legitimate cryptocurrency based on its own blockchain, but it was created as a joke rather than a usable currency. It’s also called a meme currency, which makes fun of all the other currency around it.’
Reddit traders turned to cryptocurrencies after their success in increasing GameStop’s market shares over the r/WallStreetBets forum. Wall Street hedge funds such as Melvin Capital experienced a 53% loss after a failed attempt to shortstop the retail gaming company.
Even with Dogecoin’s rise, industry experts have a word of caution for amateur traders. Ajeet Khurana, the founder of a think tank for crypto startup investments called Genezis Network, expressed concern over Dogecoin.
‘This rally is definitely not a joke as somebody is making money and somebody is losing money. However, the run-up in Dogecoin does not represent any merit. A lot of people believe in momentum play. So I don’t put stock into the Dogecoin movement except for people who are looking for bargain hunting merely on the basis of price,’ Khurana stated.
Singhal shares the views of Khurana and other experts of the crypto field voicing his concern over the rise of Dogecoin’s market cap.
‘The surge is simply because of the hype that got created, which is not sustainable in the long run. If you compare it with GameStop, then the stock should be valued based on what the company delivers, and not on someone trying to beat the Wall Street shorts,’ Singhal reasoned.
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