Dogecoin soars but valuation could be barking mad
By Neil Dennis
06:55, 20 April 2021
Dogecoin jumped another 24% in early trade on Tuesday as fans of the meme-inspired cryptocurrency continued to try to push its value towards US $0.69 to celebrate “Doge Day” on April 20.
There is no definitive answer as to why April 20 has been deemed Doge Day. Much seems based around a Twitter campaign called #DogeDay420 and an arbitrary level of 69 cents for the digital asset.
Given that 10,000 new Dogecoins are programmed to be issued every minute for the rest of eternity, the value of the asset should not be experiencing such as rally. Founders Billy Markus and Jackson Palmer created Dogecoin in 2015 to poke fun at the crypto-zealots.
Astonishing rally
And yet, for the token that traded for the most part of its lifespan at around the half-a-cent level – even as recently as December 2020 – the rally has been astonishing, with Dogecoin currently trading at nearly 42 cents.
Just over the last week it has jumped 456%, including another 21% on Tuesday.
On Tuesday, North American online computer hardware and consumer electronics retailer Newegg cashed in on the hype to announce it would accept Dogecoin as official payment on its platform.
“The excitement and momentum around cryptocurrency are undeniable, and the recent surge in Dogecoin value underscores the need to make it easier for customers to make purchases with this popular cryptocurrency,” said Andrew Choi, senior brand manager of Newegg.
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Populism Vs investor savvy
Nigel Green, founder and chief executive of financial advisory group deVere Group, and a crypto supporter, warned the Dogecoin rally was little more than a populist campaign and that investors would get burned.
“Dogecoin is the new GameStop,” he said. “In the same way that the GameStop frenzy was pitched as a battle-play of ‘Wall Street versus The Little Guy’, Dogecoin is being pitched as a battle-play against the well-established crypto giants like Bitcoin.”
He added: “But this is not typically the way reasoned, savvy investors should strategise to create and build their portfolios in order to reach their financial goals.”
Bitcoin falls
Dogecoin was among the few of the larger-cap crypto assets to rally on Tuesday. Bitcoin continued its slide from record levels, close to $65,000 hit last week.
In early London trade, Bitcoin was down a further 5% to $53,972, having lost more than 10% in the past week.
Sentiment has been driven in the past couple of trading sessions by a Bank of America/Merrill Lynch survey that showed three-quarters of fund managers think Bitcoin is in a bubble.
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