Visual representations of digital cryptocurrencies, Bitcoin, Litecoin, Dogecoin, Ethereum and Ripple are arranged in this photo illustration.
Yuriko Nakao | Getty Images News | Getty Images
GUANGZHOU, China – Dogecoin, a digital coin originally founded as a hoax, is up over 800% after a Reddit board talked about making it the cryptocurrency equivalent of GameStop.
The price of Dogecoin was $ 0.070755 around 12:01 a.m. in Singapore, according to Coingecko, an increase of over 800% from 24 hours earlier. It wasn’t far from its 24-hour high of $ 0.072330 earlier in the day.
Dogecoin was created in 2013 based on the then popular “Doge” meme, which involved a Shiba Inu dog. Dogecoin logo is a Shiba Inu. It was originally started as a joke but has since found a community.
While larger cryptocurrencies like Bitcoin and Ether have taken a back seat in recent years, the resurgence in recent days has been driven by the buzz of a Reddit group called SatoshiStreetBets. Like the WallStreetBets group behind the GameStop rally, SatoshiStreetBets is trying to pump up cryptocurrencies.
Satoshi is the name of the mysterious founder or group of people who developed Bitcoin.
At 12:03 p.m. Singapore time, Dogecoin had added around $ 7.17 billion to its market capitalization, or total value, within 24 hours, according to Coinmarket Cap. The total market capitalization was $ 8.2 billion, making it the ninth largest cryptocurrency.
On Thursday a poster claimed that Doge was the “Crypto Gme”. GME is the stock market ticker for GameStop.
Another post suggested bringing Doges to $ 1 a coin. The cryptocurrency has never been at $ 1. In 2013 when it started it was trading around $ 0.000232.
As the price of Dogecoin skyrocketed, there have been some big price drops in the past few hours. Reddit users on the forum encourage people to stop selling and “keep pushing”.
Elon Musk, the Tesla founder who previously tweeted about stocks and made them soar, has tweeted about Dogecoin in the past and stated in April 2019 that it was his “favorite cryptocurrency.”
On Thursday he tweeted a picture of a title from “Dogue” – a piece about the popular fashion title “Vogue”. Many users on Twitter and Reddit understood this to mean that Musk threw his support behind the Doge rally.
One Reddit user wrote, “Mr Musk is with us … to the moon.”
However, the situation with Dogecoin is different than with GameStop.
Reddit group WallStreetBets appears to be driving the narrative of buying GameStop stock to hurt hedge funds that sell short or bet against the stock. The purchase of GameStop shares creates a so-called short squeeze, which forces the funds to cover their losses. This drives the stock higher.
Short sellers borrow stocks to sell, only to buy them back in the future at a lower price so they can pocket the profit.
However, there is no such shorting dynamic from hedge funds playing with Dogecoin. Instead, it seems that a group of people are just trying to raise the cryptocurrency in order to make money. One of the early posts on SatoshiStreetBets was, “Let’s make DOGECOIN a thing. That’s it, that’s the contribution.”
Such activities are not new in the cryptocurrency space and have been going on for several years.
In 2018 the US Commodity Futures Trading Commission (CFTC) raised the alarm about pump-and-dump programs. This is the case when a certain cryptocurrency is hyped online and then more and more people buy it. Those who sold early when the price is high but many will buy near the top and lose money.