Dogecoin slumps after hashtags fuel meme cryptocurrency to record high
Meme-based cryptocurrency Dogecoin fell on Tuesday after hitting an all-time high in a wild session that saw supporters of the token once considered a parody use hashtags to fuel a rally until it lost steam.
Dogecoin ultimately fell 15.4 percent to 33 cents, but during the session when it hit a record peak, its market capitalization soared to more than $50 billion. After the slump, its market cap dropped roughly $45 billion, according to coinmarketcap.com.
By comparison, the wildly popular bitcoin has a market cap of more than $1 trillion.
Dogecoin fans used the hashtags #DogeDay and #DogeDay420 to post memes, messages and videos on Twitter, Reddit and TikTok, referring to the informal April 20 holiday to celebrate cannabis which is marked by smoke-ins and street parties.
“GIMME THAT DOGECOIN LAMBO!!! #DogeDay” one tweeted, referring to the Lamborghini car popular in crypto culture.
Dogecoin’s rise has come amid a surge in online trading of stocks and crypto by retail investors, stuck at home with extra cash because of the COVID-19 pandemic. It has not coincided with a growth in usage of the coin for payments or in commerce.
The same trend has spurred a boom in usage of online trading apps like Robinhood, and also fueled the social-media driven rally in GameStop stock that pitted retail investors against hedge funds earlier this year.
“It’s an extension of the same phenomenon that has led Tesla stock to be valued well beyond fundamentals and more recently to the GME (GameStop) short squeeze,” said Ajit Tripathi, head of institutional business at decentralised finance startup Aave.
Like other cryptocurrencies, Dogecoin’s price is heavily influenced by social media users including Tesla chief Elon Musk, whose tweets on the cryptocurrency in February sent its price soaring over 60 percent.
“If this goes as planned and everybody including Mr. Musk go ahead and just pour money into Doge on April 20th all at once Doge will reach prices that originally were not even conceptual,” a TikTok user said in a video promoting the coin.