The Dogecoin Joke Is Turning Serious in Latest Crypto Binge

The Dogecoin Joke Is Turning Serious in Latest Crypto Binge

(Bloomberg) –

For anyone who still thinks Dogecoin is a joke, there are some 90 billion reasons that say it’s not.

That’s how much the digital token is nearly worth in dollar terms after jumping again in Wednesday trading. Useless or not, the coin has been swept up in the crypto mania that’s gripped markets awash in central bank largesse.

It’s the latest milestone in a year of speculative excesses for a market Nouriel Roubini once described as “the mother of all bubbles.” While in the past, trillions of dollars in stimulus by governments and central banks might have triggered a rush into gold for the inflation-wary and risky stocks for the intrepid, a deluge of cash this time round is flooding into the nascent crypto market.

Few illustrate this better than Dogecoin, a so-called memecoin that’s become the destination for a horde of day traders egged on by Internet buzz and a self-propelling buying frenzy. A potential trigger for the latest leg up: Tesla Inc. co-founder and crypto fan Elon Musk is appearing on Saturday Night Live this weekend, spurring speculation he may talk up Dogecoin again on the comedy show.

Also read: Should You Buy Dogecoin and How Is It Different From Bitcoin?

“When you think about the full spirit of what this crypto revolution is, there’s something pure in what Dogecoin has done,” Mike Novogratz, founder of Galaxy Digital Holdings, said on CNBC. “I worry that once the enthusiasm rolls out, there are no developers, there’s no institutions coming in. But it’s got the moniker of the people’s coin right now and it’d be very dangerous to be short.”

The overnight gain took Dogecoin’s one-week advance to 118% and its value to $87 billion in Wednesday trading, according to CoinMarketCap.com data, eclipsing the largest exchange-traded gold fund and even stocks like Fedex Corp. and Snap Inc. A year ago, the asset was worth just $315 million.

It’s all the more remarkable given that other retail favorites from bullish stock options to Cathie Wood’s tech fund have all seen activity dip from the highs earlier this year.

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Now, cryptomania might even be hurting gold, according to some analysts. The precious metal has suffered outflows in recent months even as a deluge of stimulus cash drove the value of the world’s crypto market to a $2 trillion record.

“At some point, something is just real,” said Sam Bankman-Fried, the Hong Kong-based chief executive officer of the FTX crypto exchange. “If Dogecoin is stupid and valueless, it shouldn’t be worth $90 billion. How about gold or Bitcoin or euros? Our collective imagination has given them value, and now we just think about them having value.”

Dogecoin, started in 2013 as a joke based on the Shiba Inu breed of dog, may become so accepted by the mainstream it might evolve into a payment option at retailers, Bankman-Fried said. At Blockfolio, a firm owned by FTX that helps users manage their crypto portfolios, trading volumes are spiking with Dogecoin’s every gain, a sign it’s become essential to the whole ecosystem.

Dogecoin buying got so fevered Tuesday, Robinhood’s trading app briefly crashed. Other so-called altcoins surged, with Dash spiking 11% over a 24-hour period through the New York morning on Wednesday and Ethereum Classic rising 25%.

While it’s difficult to assign firm reasons to Dogecoin’s ascent, a few factors have fueled the gains. On April 20, a day normally associated with pot, some users got #DogeDay trending to push up the price. Celebrities from Musk to the Dallas Mavericks’ billionaire owner Mark Cuban also jumped on the bandwagon. The Gemini crypto exchange backed by the Winklevoss twins announced Tuesday it will soon enable trading of the coin.

“As the economy reopens, a lot of these Covid-related movements in various assets will experience some volatility,” said Tony Bedikian, head of global markets at Citizens Bank. “But I think they are going to become a permanent part of the currency markets as central banks have continued to print money at astronomical levels.”

(Adds context throughout and comments from Novogratz, Bedikian)

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Ethereum is leaving bitcoin in the crypto dust

New York (CNN Business) Hunter S. Thompson once wrote, “There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge.” He was referring to the intoxicating drug, not the cryptocurrency. But ethereum investors may have reasons for fear and loathing, too.

bitcoin XBT The world’s second-most valuable cryptocurrency has soared even more thanin 2021 thanks to non-fungible token mania and increased adoption of ethereum — ether, for short.

Ether prices are now hovering around $3,400, a more than 350% gain this year. Bitcoin prices have risen a “mere” 90% by way of comparison. In the past week alone, ether is up a staggering 30% while bitcoin is flat. That has raised some concerns that ether has risen too far, too fast, just like bitcoin did in 2017 before plunging spectacularly in 2018.

So why has ethereum, which now has a combined market value of almost $400 billion for all its coins in circulation, taken off lately?

Ether is the main currency of choice used to purchase non-fungible tokens, or NFTs, the digital assets that have become increasingly popular in the art and sports collectibles world.

Read More

Crypto Mania Sends Doge Soaring, Crashes Robinhood Token Trading

Bloomberg

(Bloomberg) – A week that could set in motion the eventual collapse of the 314-year union between England and Scotland is concentrating City trading desks on market disasters ahead.As Scots enter a May 6 vote pitched on whether there should be a second independence referendum, fund managers and sell-side strategists see potential for massive chaos across the U.K.’s economic landscape in the years to come. Yet in an echo of the early days of the Brexit poll, few are hedging for this disruptive prospect.While the stakes could hardly be higher, it’s not clear the U.K. government will agree to another referendum, even if pro-independence parties win a majority on Thursday. But with the vote stirring uneasy memories of Britain’s split from the European Union, fund managers are dusting off old playbooks for how to trade a binary risk event where timing is everything.“You’d have massive uncertainty, financial chaos and recession,” and a 10% devaluation of the pound, said Mark Nash, a money manager at Jupiter Investment Management.Nash isn’t hedging such a scenario yet – and neither is the market. The median of forecasts in a Bloomberg survey has the pound holding at $1.39 through June.Still, a handful of investment analysts have ventured forth bearish calls.Strategists at Credit Agricole SA recommend shorting the pound versus the dollar, with political risk over Scottish independence among the reasons.Barclays Plc abandoned a call to go long on the pound versus the euro on the potential for pre-election volatility.UBS Group AG credit strategists cut their outlook on a select group of U.K. bank bonds to neutral from overweight, warning that the “long U.K. trade” in credit could unravel on referendum risk.One thing is for certain: if things escalate, money managers will need to move fast. Odds show a repeat of the 2014 referendum, where Scotland voted to remain, would be too close to call.“Markets ignore things and ignore things and ignore and then suddenly panic. I have a feeling that is quite likely to happen with the Scottish independence issue,” said Jane Foley, head of currency strategy at Rabobank. “What I’m telling our clients is to be aware that even though this may not impact the pound right now, it’d be foolhardy to ignore it because it might suddenly come into the market’s agenda.”Consequences of secession would be huge. Negotiations would be necessary over what currency an independent Scotland would use, whether it would take a share of the British national debt, and what trade arrangements it would have with the remainder of the U.K. The Scottish National Party also harbors ambitions to bring Scotland into the EU, a situation that would create huge border and trade tensions, if the problem of ring-fencing Northern Ireland in Brexit is any example.“I wonder whether markets have actually considered the full ramifications of this election,” said Julian Howard, director of multi-asset solutions at GAM Investments, whose portfolios are strategically positioned for a decline in sterling. “It would be a lot worse than Brexit as Scotland is much more closely stitched to the U.K. than Britain was into Europe. We’re talking since the 1700s rather than the 1970s.”Mr. BrexitThe domicile of financial institutions could also be contested. If they were to remain based on Edinburgh, Scottish banks would miss out on the support of the Bank of England’s quantitative easing program and become less creditworthy, according to Charlie Parker, managing director at boutique investment manager Albemarle Street Partners.It’s the kind of tail-risk event that makes careers, for those with enough foresight to get it right.At Nomura Holdings Inc., strategist Jordan Rochester was part of a team that developed a money-spinning model to help the bank call the 2014 referendum result early. His political analysis on the split from the EU then led him to be nicknamed Mr. Brexit. Now he says the pound could fall up to 6% if Scotland voted to leave, depending on how priced it was prior to the result.But even he isn’t worried about the election on Thursday itself, and says the pound could even be in line for gains if the SNP fails to win more than half of the seats, as some polls suggest. Still, the independence cause could prevail once Green votes are counted, and an actual referendum date could trigger heavy hedging.Read: Why Scotland’s Road to Independence Vote Is Rocky: QuickTake“The market will look at polling in a new referendum and treat it much more like a tighter vote than 2014 – when it was only last-minute scares, not months in advance,” Rochester said.Westminster would likely mount resistance to any plans to seek an independence vote, refusing to grant the Scottish parliament the permission to make it legally watertight. That leaves the potential for a lengthy constitutional quagmire over whether the Scottish parliament can call a legitimate referendum on its own.Even though the prospect of an invigorated Scottish break-away movement is scary for traders, derivatives markets remain relatively calm. The term structure of sterling’s implied volatility has become inverted, signaling angst over events on Thursday – though the cost of insuring swings is still below its 12-month average. Over the longer-term, five-year risk reversals in cable trade near their average since Bloomberg began compiling data in 2005.“The difficulty with assessing the impact of these events on markets is that even if we know they are on the horizon, we don’t know when markets will react and if in the end the status quo will prevail,” said Sheena Shah, currency strategist at Morgan Stanley. Her firm sees a 30% chance of a referendum by the end of 2024. “There are so many unknowns and follow-up hurdles.”(Updates options pricing in penultimate paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.