Dogecoin boom is a retail phenomenon driven by Federal Reserve Chairman, argues CEO of Galaxy Digital
Dogecoin’s recent cost rise has actually caught Wall Street’s attention. The cryptocurrency shot up more than 400% in the past week, bringing its market cap to more than $50 billion before pulling back from all-time highs on Tuesday.
The meteoric climb initially started around the time of the Reddit-fueled meme-stock trading rally, following a discussion on Reddit about making Dogecoin (DOGE-USD) the Gamestop (GME) equivalent of the crypto space.
While some investors and celebs have followed suit, including recommendations from widely known names like Shark Tank financier Mark Cuban, Celebrity Chef Guy Fiere, and Tesla (TSLA) CEO Elon Musk, others are urging care. Mike Novogratz, CEO of Galaxy Digital, told Yahoo Finance on Tuesday that investors “need to be extremely careful” with Dogecoin.
“This is a retail phenomenon being driven by the reality that [Federal Reserve] Chair Jay Powell is giving money to everybody. There is excessive cash in the system,” said Novogratz. “This is very much like GameStop where these meme coins use something in the young, brand-new financier base and it becomes enjoyable. It builds on the momentum and they wish to go after the shorts.”
” I do not believe it is going to have legs due to the fact that it is all retail and all of a sudden– there is no one behind it. No organizations can be found in. No strategic buyers. Nobody is dealing with how to make Doge part of your portfolio,” he included.
Dogecoin was developed about 8 years ago by programmers Jackson Palmer and Billy Markus as a joke, utilizing a popular meme produced by a Shiba Inu pet dog owner in Japan.
Recently, Dogecoin increased after Musk tweeted “Doge Barking at the moon.” And that wasn’t the only time Musk sustained spikes in the value of Dogecoin. Previously this year, he tweeted ” Dogecoin is individuals’ crypto,” which activated a 60% price jump in just two days.
Today, Dogecoin is among the largest digital cryptocurrencies, reaching a market cap of more than $50 billion Tuesday. Although, Wednesday morning Dogecoin dropped by more than 20%. Compared to the cryptocurrency leader, Bitcoin (BTC-USD), Dogecoin is still simply a fraction of Bitcoin’s $1 trillion market cap.
The most recent jump in Dogecoin has triggered some crypto investors to compare Dogecoin to Bitcoin’s recent rally. While both have taped significant gains because the start of the year, Novogratz said it’s important to make the distinction between the two cryptocurrencies.
“It’s very incorrect to compare Doge to Bitcoin or the other coins. The quantity of capex and opex that goes into keeping the Bitcoin network decentralized and up and running each year is enormous,” added Novogratz. “Doge is a canine, no pun intended.”