Dogecoin, boosted by Elon Musk and Mark Cuban, rallied around 180% on Friday, according to CoinMarketCap.com, reaching a market value of over $ 48 billion. It is now up 18,000% from a year ago when it traded at $ 0.002 and was worth around $ 250 million.
Doge’s boom is part of a rise in altcoins, a term for all digital tokens that have sprung up in imitation of Bitcoin. Like most of them, it has a limited use case, making it a tool for speculators and raising concerns that a bubble is inflating in a crypto world now worth over $ 2.25 trillion. .
“It reminds me of the days of dot com. We knew something big was happening, a lot of investors were looking for it hard. It led to a bubble, ”said Scott Knapp, chief market strategist at CUNA Mutual Group. “For every Amazon.com, 10 pets.com went bankrupt. Is Dogecoin the pets.com of the cryptocurrency age? “
Interest in crypto is on the rise again after companies from PayPal to Square started allowing Bitcoin transactions on their systems, and Wall Street companies like Morgan Stanley started providing access to tokens to some of the richest customers. From the start, crypto die-hards who say blockchain technology will rewire the financial community have plugged in crypto and are getting richer 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 earlier this year when he posted a photo from a fake magazine ” Dogue ”featuring a dog in a red sweater.
But Michael Novogratz, CEO of Galaxy Digital Holdings, isn’t buying the hype, since Dogecoin “doesn’t really have a purpose.”
“It’s reminiscent of GameStop,” he said in an interview with Bloomberg TV, referring to the meme stock mania that gripped the markets in February. “I would be very, very worried if any of my friends invested in Dogecoin at these prices.”
With little evidence for buying cryptocurrencies, the likelihood of them crashing remains high, leaving novice traders who jumped into the hype vulnerable to large losses.
“The government has injected so many monetary and fiscal stimulus into the economy now that even worthless assets are being outbid,” said Michael O’Rourke, chief market strategist at JonesTrading.
Still, the popularity of alt-coins 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 by 28% since the start 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 on Friday, and Bitcoin now accounts for less than 54% of the crypto market capitalization – the lowest level in almost two years.
“On the altcoin front, we continue to see strong momentum,” said Pankaj Balani, CEO of Delta Exchange, a major crypto derivatives exchange, on Thursday. He noted Ether’s recent record high and increased activity in decentralized finance or DeFi, adding that “decentralized exchange coins will be the focus in the coming days, as the market has validated Coinbase at a value. of $ 100 billion.
Other tokens with weak or non-existent fundamentals are also on the rise. Cardano and Polkadot, both in the top 10 cryptocurrencies by market cap, jumped this week.
“Polkadot and Cardano have very few” users “currently,” Shashwat Gupta, founder of Altcoinbuzz.io, said in an email Wednesday, although he added that a substantial amount of development was underway. on them.
And it looks like Coinbase CEO Brian Armstrong may have been on to something when he said after the listing that this marked a ‘change in legitimacy’ for the crypto.
The Coinbase listing “will ultimately provide more ‘use cases’ for cryptos and is expected to keep the crypto market growing,” said Edward Moya, senior market analyst for North America at Oanda Corp .