By Joanna Ossinger and Vildana Hajric
While Coinbase Global Inc. captured the headlines with its market debut, the frenzy around digital tokens is taking its zaniest turn yet in the price of a token created as a joke.
Dogecoin, boosted by the likes of Elon Musk and Mark Cuban, rallied roughly 180% Friday, according to CoinMarketCap.com, reaching a market value of more than $48 billion. It’s now up 18,000% from a year ago, when it traded for $0.002 and was worth about $250 million.
Doge’s surge is part of a rise in altcoins, a term for all the digital tokens that have sprung up in imitation of Bitcoin. Like most of them, its use case is limited, making it a tool for speculators and raising concern that a bubble is inflating in a crypto world now worth more than $2.25 trillion.
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.
That rise was part of the GameStop mania that gripped markets in February. With little to back up the case for buying assets like Doge and other tokens, 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.”