Dogecoin rips in meme-fuelled frenzy as biggest cryptos struggle

The second-largest cryptocurrency, Ether, fell 5.1 per cent to US$2,097 on April 20, 2021.
The second-largest cryptocurrency, Ether, fell 5.1 per cent to US$2,097 on April 20, 2021.PHOTO: REUTERS

HONG KONG (BLOOMBERG) - Fans are driving Dogecoin higher to mark an auspicious day, even while other cryptocurrencies continue to struggle.

The Shiba Inu-themed satirical token surged some 17 per cent in the past 24 hours, according to data from CoinGecko.com as of 11am in Hong Kong, while the sector's leaders extend losses.

Bitcoin tumbled 3.4 per cent to about US$54,287 (S$72,066) for a fifth straight session of declines, and following the largest intraday drop in almost two months on the weekend. The second-largest cryptocurrency, Ether, fell 5.1 per cent to US$2,097 on Tuesday.

"There's a tribe of investors, many of them millennials, who see it as a cause, a movement," said Antoni Trenchev, the co-founder of crypto-lending firm Nexo. "Dogecoin is symptomatic of the zeitgeist happening before our very eyes."

This latest volatility fuels talk about a bubble in crypto assets and has dented their overall market cap. Nevertheless, the total remains close to the record US$2 trillion threshold surpassed a fortnight ago. Crypto's champions are part of a iconoclastic trend, including the WallStreetBets retail traders, that's challenging investment norms.

Dogecoin's sprint is propelled by the #DogeDay hashtag trending on Twitter, with fans including Tesla chief Elon Musk pushing for record highs on April 20, or 4/20.

The likes of Bitcoin and Ether are still up about 90 per cent and 180 per cent, respectively, this year as the crypto industry matures. Institutional investors such as Goldman Sachs Group and Bank of New York Mellon have stepped into the sector, and the Nasdaq listing of Coinbase Global last week has lifted crypto's profile in mainstream markets.

"Bitcoin is trying to stabilise following the weekend plunge to bear-market territory," said Edward Moya, senior market analyst at Oanda Corp. "Institutional demand might find this massive sell-off as a buying opportunity. Bitcoin could continue to stabilise here, with a new trading range forming between US$52,000 and US$62,000 for the next few weeks."

While fans of Dogecoin keep making waves, some crypto investors offered words of caution.

"It really must be alt-coin season," said Justin Chuh, senior trader at regulated digital asset investment manager Wave Financial, who expects most retail investors are best off buying and holding a portfolio of just Bitcoin and Ether, and the Internet pile-on in the asset class only "adds to the gut-wrenching volatility".