Diving Into Dogecoin

All the world’s a meme and Dogecoin is its cryptocurrency.

A digital token created as a joke has been boosted by the likes of Elon Musk and Mark Cuban to rally over 110% going into the weekend, reaching a market cap of US$45 billion and up 18,000% from a year ago when it was trading for US$0.002.

Demand for the meme coin was so brisk that for a moment, investors trying to trade it on zero-fee trading app Robinhood, crashed the site.

The rally in Dogecoin is part of a broader ascent in so-called “altcoins” a term for cryptocurrencies outside of BTC.

But while BTC and even ETH have established use cases, altcoins like Dogecoin remain firmly on the speculative fringe, raising concerns that an unsustainable bubble is being inflated in cryptocurrencies which now command a market cap of over US$2.25 trillion.

Created as a joke by software engineers Billy Markus and Jackson Palmer in 2013, the Shiba-Inu themed Dogecoin rallied hard earlier this year when Tesla (+0.13%) CEO Elon Musk posted a photo of a faux magazine “Dogue” featuring a dog in a red sweater.

Joke or not, altcoins have risen to a level where they’re no longer easy to ignore.

The total market cap of all cryptocurrencies currently exceeds US$2.25 trillion, over half of which are altcoins.

And as the Dogecoins of the cryptocurrency world have rallied, so has BTC’s dominance declined, which has fallen by over 28% since the beginning of the year.

But Dogecoin is hardly the only altcoin generating buzz, with Cardano and Polkadot, both in the top ten cryptocurrencies by market cap, surging over the past week.

Cardano and Polkadot are not new (nor is Dogecoin for that matter) and unlike ETH, have few users even though development around them has been growing.

As BTC’s upside starts to taper off with greater trading volumes, speculative activity has spilled over bigly into the altcoins, many which have been around for years, but have little to show for it.

Outside of ETH, the vast majority of altcoins which seek to provide alternative use cases to BTC’s store of value narrative have had patchy track records, with limited protocol or app development.

Altcoins linked to decentralized finance however, especially those working off ETH or Binance Smart Chain, have been growing the most rapidly and are likely to be the focus in the immediate term.