This is a big moment for Dogecoin (CCC:DOGE-USD) as the cryptocurrency that was created as a joke gets listed on crypto exchange Coinbase’s (NASDAQ:COIN) Pro Platform, making it easier for investors to buy and trade the digital coin.
News of Dogecoin’s debut on the Coinbase exchange was enough to send the cryptocurrency up 25% on June 2 to 42 cents. The rise puts Dogecoin’s market capitalization at a staggering $54 billion, making it the sixth-largest cryptocurrency by market value.
Not bad for a digital coin that features the image of a Shiba Inu dog on it, was started as a joke to make fun of cryptocurrencies and has no underlying purpose or utility.
Renewed Hype for Dogecoin
Year-to-date, Dogecoin has ridden an epic wave of hype to a gain of more than 6,000%. On the first trading day of 2021, Dogecoin was worth just a fraction of 1 cent. It reached a peak value of 67 cents just before Tesla (NASDAQ:TSLA) Chief Executive Officer Elon Musk hosted Saturday Night Live in early May.
Musk had been hyping up the digital asset on social media in the days leading up to his SNL appearance, working his followers into a frenzy about the coin.
However, Dogecoin’s price quickly deflated when Musk referred to it as “a hustle” during the SNL broadcast. Dogecoin dropped as much as 65% to 23 cents following Musk’s disparaging remarks.
However, the hype appears to have returned to Dogecoin in the lead up to its listing on Coinbase’s Pro Platform on June 3. Dogecoin’s recent rise to 42 cents per coin was driven entirely by its impending availability on Coinbase. Of course, Musk fueled the latest hype by retweeting a picture that shows Dogecoin taking over the financial system. He wrote, “It’s inevitable.”
Coinbase is one of the largest cryptocurrency exchanges in the world. Its Pro Platform is designed for professional traders. Dogecoin is already available on the Robinhood app that is popular with retail traders. Also, it is available through the Gemini exchange that is run by the Winklevoss twins of Facebook lore.
Now What?
Beyond the Coinbase listing, nothing has fundamentally changed with Dogecoin. The digital coin still has no purpose or practical application.
Its price rise this year was due to retail investors that frequent the WallStreetBets Reddit page rallying around Dogecoin. These investors also embrace every remark made by Musk. He has become a Pied Piper to them. Meanwhile, the group has pushed the price of meme stocks to unjustified and unsustainable levels this year.
Dogecoin began rising in late January at the same time that the Reddit traders began pushing shares of video game retailer GameStop (NYSE:GME) higher. And the meme stock craze was born. Because of its grassroots support, and the fact that professional traders scoff at it, retail traders have taken to calling Dogecoin the “people’s coin.” Many fans of Dogecoin claim they want to push the cryptocurrency to $1 per coin just to show Wall Street that they can.
Leave Dogecoin to the Amateurs
There continues to be no good reason to invest in a purely speculative asset such as Dogecoin. Hype and hyperbole aside, the digital coin has no reason to exist. Software engineers Billy Markus and Jackson Palmer admit that they created Dogecoin back in 2013 merely as a joke.
Unlike other cryptocurrencies such as Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD) whose blockchain technology has utility, there is literally no reason for Dogecoin to exist.
The fact that Musk tweets about the coin is not a reason to invest. Dogecoin should be left to people who don’t mind a joke at their own expense.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
