New York — Animal spirits are alive and well in the cryptocurrency world, with the frenzy sending dogecoin surging as much as 50% again and crashing Robinhood’s trading app.
Other alternative coins (altcoins) also took off, with cryptocurrency dash spiking as much as 14% and Ethereum Classic’s ether jumping more than 30%. In the world of decentralized finance (DeFi), digital tokens such as force DAO and tierion surged more than 1,000% on Tuesday, according to CoinMarketCap data.
Meanwhile, Robinhood said it is experiencing issues with crypto trading and is working to resolve them as soon as possible, according to its status update page.
“You have money looking for a home and this is one of those areas of the market where there is speculation happening, there is significant appreciation happening in a short period of time,” Chad Oviatt, director of investment management at Huntington Private Bank. “You get that excitement there.”
The rallies defied easy explanation and continued a trend that’s seen the value of all digital tokens surge past $2.25-trillion. Doge, created as a joke in 2013, has been used in marketing gimmicks, the latest by the Oakland A’s baseball team, which offered two seats to games this week for 100 dogecoins. The Gemini crypto exchange backed by Tyler and Cameron Winklevoss said it now supports doge, and will soon enable trading of the cryptocurrency.
Dogecoin’s red-hot advance from about 0.002c a year ago — when it was worth about $300m — has captured the interest of many on Wall Street. It’s even caught the attention of the US Federal Reserve — last week the central bank’s chair answered “some of the asset prices are high” when asked if things such as GameStop’s and dogecoin’s supercharged rallies created threats to financial stability.
As a sign of dogecoin’s rising popularity, the Robinhood app is among the top 10 downloads at the Apple App Store. Meanwhile, Coinbase Global, the largest US crypto exchange, doesn’t offer doge trading — its shares were down more than 5% on Tuesday, on track for the lowest close since its market debut in April.
“It’s pretty amazing that something that started out as a joke has become so popular,” said Matt Maley, chief market strategist for Miller Tabak.
Though interest in digital assets has picked up in recent months as more traditional firms that were long hesitant to enter the crypto space warm up to cryptocurrencies, it’s altcoins that have captured the most attention in recent days. Bitcoin has taken a back seat after record-setting rallies from ether and doge, wrote Edward Moya, senior market analyst at Oanda.
“The dogecoin bubble should have popped by now, but institutional interest is trying to take advantage of this momentum and that could support another push higher,” he said in a note. “Dogecoin is surging because many cryptocurrency traders do not want to miss out on any buzz that stems from Elon Musk’s hosting of Saturday Night Live.”
Meanwhile, many — including famed crypto investor Mike Novogratz — have warned that the rallies could be unsustainable. Novogratz, CEO of Galaxy Digital Holdings, said recently he’d be “very, very worried” were one of his friends to invest in doge.
“It seems that investors are careening from one hot dot to another, like a pinball game,” said Mike Bailey, director of research at FBB Capital Partners. “My sense is this speculative wave will suffer the same fate as the GameStop and other Robinhood ‘flash-in-the-pan stocks’. Cryptocurrencies may have become a new asset class, like precious metals, but surges such as these seem unsustainable.”
