Dogecoin boom is a retail phenomenon driven by Federal Reserve Chairman giving money to everyone, argues CEO of Galaxy Digital
Dogecoin’s current rise has generated much attention from Wall Street. The cryptocurrency soared more than 400% in the past week, bringing its market cap to more than $50 billion before drawing 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 area.
While some stars and financiers have actually jumped on the bandwagon, consisting of endorsements from popular names like Shark Tank investor 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 very mindful” with Dogecoin.
There is too much cash in the system,” said Novogratz. “This is really much like GameStop where these meme coins tap into something in the young, new investor base and it ends up being enjoyable. It develops on momentum and they want to go after the shorts.”
“I don’t believe it is going to have legs due to the fact that it is all retail and all of an abrupt– there is no one behind it. Nobody is working on how to make Doge part of your portfolio,” he included.
Dogecoin was created about 8 years earlier by developers Jackson Palmer and Billy Markus as a joke, using a popular meme developed by a Shiba Inu pet dog owner in Japan.
Recently, Dogecoin escalated after Musk tweeted “Doge Barking at the moon.” Which wasn’t the only time Musk sustained spikes in the worth of Dogecoin. Earlier this year, he tweeted ” Dogecoin is the people’s crypto,” which triggered a 60% cost jump in just 2 days.
Today, Dogecoin is among the biggest digital cryptocurrencies, reaching a market cap of more than $50 billion Tuesday. Wednesday morning Dogecoin plummeted by more than 20%. Compared to the defacto crypto leader, Bitcoin (BTC-USD), Dogecoin is still simply a fraction of Bitcoin’s $1 trillion market cap.
The latest jump in Dogecoin has prompted some crypto investors to compare Dogecoin to Bitcoin’s recent rally. While both have taped substantial gains since the start of the year, Novogratz stated it’s essential to make the distinction between the two cryptocurrencies.
“It’s extremely incorrect to compare Doge to Bitcoin or the other coins. The quantity of capex and opex that enters into keeping the Bitcoin network decentralized and up and running each year is immense,” included Novogratz. “Doge is a pet, no pun planned.”