Social media is truly the Achillies heel of this generation’s finances. And at least two incidents this year bear witness to that – the GameStop short squeeze from January and the more recent dogecoin frenzy.
This weekend, cryptocurrency platforms were abuzz with activity. All thanks to The Boring Company founder Elon Musk. The self-proclaimed ‘dogefather’ on American TV show Saturday Night Live (SNL) described dogecoin as a mere “hustle”, plummeting its value.
As investors scrambled to trade, Indian crypto exchange platforms WazirX and CoinSwitch Kuber witnessed an 30X and 30% increase in trading volumes over the weekend, respectively.
Still a bit lost? Let’s back up.
In 2013, Jackson Palmer and Billy Markus launched what they called meme cryptocurrency, to pay a satirical hat tip to the growing popularity of altcoins.
However, the recent tailwinds in the cryptocurrency industry, the listing of a crypto exchange platform on Nasdaq and of course, Musk’s tweets recommending dogecoin, propelled its value to unprecedented heights. Dogecoin’s valuation, as per Coindesk, went up by over 1100% in just one month -- from $0.060 on April 8 to $0.73 on May 8, the day the SNL episode aired.
Dogecoin's market capitalisation on the same day was around $73 billion, making it the fourth largest cryptocurrency in the world.
But as Isaac Newton discovered, what goes up will eventually come down.
Musk’s comments on SNL drove the meme cryptocurrency’s valuation down. On May 11, dogecoin was worth $0.49.
“What doge has to the crypto work is just phenomenal. It was not only trending on exchanges but also on Twitter and family WhatsApp groups. As an exchange, we were prepared for 5X instant growth, but this was another level. DOGE’s price movement and volumes tested our system at 30X more volume and probably 40X more signups. We could see consistent inflow of funds which in turn also pushed our banking partners over their limits,” Siddharth Menon, co-founder and COO of WazirX, told TechCircle.
The platform was unable to transfer funds, citing technical glitch on the banking partner’s end, on May 9. Its banking partner, Paytm Payments Bank, reportedly denied the network issue.
We have reached a scale where banks cannot process our user's deposits. They are not able to scale transactions per second, need 4x more capacity.— Siddharth ( WazirX ) (@BuddhaSource) May 9, 2021
As a result bank has disabled IMPS deposits till they can scale. Their entire system is down.
We are getting you a solution.
Take away its entertainment value, how good is a dogecoin investment really?
CoinSwitch Kuber co-founder and CEO Ashish Singhal told TechCircle that it should be up to the investor based on their choices, funds and risk appetite on how they want to invest.
“Dogecoin has attracted attention, ever since Elon Musk has been tweeting about it, and again when there was a mention of it during the SNL episode. As far as retail investors are concerned, if one should invest in dogecoin or not is completely subjective. As an investor, one needs to know when to exit from it,” Singhal said.
“While Elon Musk is a big supporter of doge, I would still be cautious when it comes to putting money that I can't afford to lose. Doge was born out of a meme coin, and today its value has gone really up. It has unlimited supply and mining is not deflationary. I too bought some doge for fun a few months back and just got lucky. I am looking forward to more dogemageddon. Furthermore, DOGE volume on WazirX over weekend was 370.68 million,” WazirX’s Menon said.
Picture abhi baaki hai, mere dost
On Monday, Musk tweeted again on dogecoin. He announced that the launch of a SpaceX satellite Doge-1 to the moon, reportedly in the first quarter of next year. The mission, he said, will accept payments in doge.
SpaceX launching satellite Doge-1 to the moon next year— Elon Musk (@elonmusk) May 9, 2021
– Mission paid for in Doge
– 1st crypto in space
– 1st meme in space
To the mooooonnn!!https://t.co/xXfjGZVeUW
On Tuesday, Musk ran a poll on Twitter, asking if Tesla should begin accepting doge payments. What were the results of that poll, we wonder.