It’s not just GameStop, Bed Bath & Beyond, and the company formerly known as Blockbuster that are having surprising runs in the markets as Reddit-posting day traders flex their informally coordinated muscles. The price of Dogecoin, a joke cryptocurrency whose main selling point is that its Shiba Inu mascot is extremely meme-able, has jumped roughly 500 percent over the past week. Its market cap, as of this writing, stands at about $6 billion. The cryptocurrency’s strange and sudden rise follows GameStop’s bewildering stock market rally over the past two weeks, driven by boisterous retail investors getting together online to squeeze established hedge funds with short positions in the company. Hype on Reddit and other social-media sites also seems to be propelling Dogecoin to new heights, although in the case, it might be more for the lolz—and for making bank.
The push behind the GameStop stock originated in a subreddit called WallStreetBets. The conventional wisdom on Wall Street is that GameStop’s business model of selling video-game products in brick-and-mortar stores is ill-suited for the modern digital economy. Hedge funds and other major institutional investors have been short-selling the stock in an attempt to profit from the company’s decline. In a campaign that’s taken on a populist tinge, Reddit investors are investing en masse in the stock in an attempt to blow out the Wall Street firms. It’s led to major backlash from professional investors, and platforms like Robinhood and TD Ameritrade have instituted limits on trading the GameStop stock, much to the consternation of the Reddit crowd.
So things are getting tense, but they’re also getting … weird. While members of WallStreetBets have hawked Dogecoin, the epicenter of the craze seems to be another subreddit called SatoshiStreetBets. (While WallStreetBets describes itself as “like 4chan found a Bloomberg terminal, SatoshiStreetBets’ description reads, “like 4chan found a GPU rig - the crypto version of WallStreetBets.) The subreddit is named after Satoshi Nakamoto, a pseudonym for the person, or persons, who invented bitcoin. SatoshiStreetBets is currently flooded with memes encouraging investors to buy and hold Dogecoin, some of which link the subreddit’s efforts to that behind the current GameStop surge.
Tesla CEO Elon Musk also joined in on the fun, tweeting out a Doge-inspired parody of Vogue magazine on Thursday. The price jumped 14 percent shortly afterward.
Yet the rise of Dogecoin, while sharing the same madcap spirit of the GameStop rally, doesn’t have the same underdog dynamic. There aren’t really any institutional forces trying to keep Dogecoin down; it’s basically a lot of Davids without a Goliath. Members of SatoshiStreetBets have been pushing each other to get the value of Dogecoin, currently at about $0.056 as of Friday afternoon, up to $1. But that goal is in service of making “gains,” rather than making any sort of statement. As one popular SatoshiStreetBets post reads, “DONT BE SMALL MINDED. IF YOU WANT A YACHT OR WANT TO RETIRE HOLD DOGE!!!” Bitcoin has also seen recent increases, with its price rising about 15 percent over the past week. (Musk’s Twitter bio as of Friay simply reads “#bitcoin” along with an emoji of the bitcoin logo.) Robinhood moved to limit crypto trading on Friday by turning off its “Instant Buying” feature that allows users to transfer and then immediately spend funds from their bank accounts to buy cryptocurrency.
“Due to extraordinary market conditions, we’ve temporarily turned off Instant Buying power for crypto,” Robinhood said to Reuters. “Customers can still use settled funds to buy crypto. We’ll keep monitoring market conditions and communicating with our customers.” Robinhood has not clarified what these “extraordinary market conditions” are or how they are affected cryptocurrency trading.
Entrepreneur Jackson Palmer and programmer Billy Markus created Dogecoin in Dec. 2013 using the same technology underlying Litecoin, another more established cryptocurrency. The Shiba-Inu-inspired coin is perhaps the most successful gimmick cryptocurrency; others include Pizzacoin, Coinye, and UFOCoin. Its last high-profile surge was in early 2018, around the time when pretty much all cryptocurrencies were seeing spikes as the result of a trading craze. Dogecoin peaked at a little under 2 cents before the crypto market crashed, and it had lost nearly 90 percent of its value by 2019.
Future Tense is a partnership of Slate, New America, and Arizona State University that examines emerging technologies, public policy, and society.
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