Interest in crypto is on the rise again after companies from PayPal to Square started enabling transactions in Bitcoin on their systems, and Wall Street firms like Morgan Stanley began providing access to the tokens to some of the wealthiest clients. All along, crypto diehards who say the blockchain technology will rewire the financial community have been plugging crypto, getting rich in the process.
The Shiba-Inu themed Dogecoin was created as a joke by software engineers Billy Markus and Jackson Palmer in 2013. Musk sparked a rally in it earlier this year when he posted a photo of a faux magazine “Dogue” featuring a dog in a red sweater.
But Michael Novogratz, chief executive officer of Galaxy Digital Holdings, isn’t buying the hype, since Dogecoin “doesn’t really have a purpose.”
“It’s reminiscent of GameStop,” he said in an interview with Bloomberg TV, referring to the meme stock mania that gripped markets in February. “I would be very, very worried if one of my friends was investing in Dogecoin at these prices.”
With little to back up the case for buying cryptocurrencies, the likelihood of them cratering remains high, leaving novice traders who jumped in on the hype vulnerable to steep losses.
“The government has pumped so much monetary and fiscal stimulus into the economy now, even worthless assets are being bid up,” said Michael O’Rourke, chief market strategist at JonesTrading.
Yet alt-coin popularity is hard to ignore. While Bitcoin is worth more than $1 trillion, the total market cap of the token universe now exceeds $2.25 trillion, according to CoinGecko.com, which tracks more than 6,700 coins.
Bitcoin’s dominance in the crypto world has declined 28% since the beginning of the year, according to OKEX Insights Analyst Robbie Liu, citing data from Tradingview. The waning influence started to accelerate this month, he said in an email Friday, and Bitcoin now accounts for less than 54% of the crypto market capitalization — the lowest level in nearly two years.
“On the altcoins front, we continue to see strong momentum,” said Pankaj Balani, the CEO of Delta Exchange, a leading crypto derivatives exchange, in a note Thursday. He noted Ether’s recent record and increased activity in decentralized finance or DeFi, adding that “decentralized exchange coins will be in focus in the next few days, given that the market has validated Coinbase at a $100 billion valuation.”
Other tokens with shaky to no fundamentals are also rising. Cardano and Polkadot, both in the top 10 cryptocurrencies by market cap, have surged this week.
“Polkadot and Cardano have very few ‘users’” currently, said Shashwat Gupta, founder of Altcoinbuzz.io, in an email Wednesday, though he added that there’s a substantial amount of development being built on them.
And it looks like Coinbase CEO Brian Armstrong may have been on to something when he said after the listing that it marks a “shift in legitimacy” for crypto.
The Coinbase listing “ultimately will deliver more ‘use cases’ for cryptos and should keep the crypto market growing,” said Edward Moya, senior market analyst for North America at Oanda Corp.