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Dogecoin mania reaches Indian crypto exchanges

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Me to @WazirXIndia right now #dogecoin #Crypto #WazirXScam https://t.co/S1nI3smAbb — Aashvi vijay (@AashviVijay) 1620192914000

ETtech Zerodha’s chief executive Nithin Kamath weighs in on the Dogecoin frenzy

ETtech Graphic: Rahul Awasthi

ETtech Crypto policy expert Tanvi Ratna on new age social movements like GameStop and Doge frenzy

ur welcome https://t.co/e2KF57KLxb — Elon Musk (@elonmusk) 1612425450000

The Dogecoin mania has reached Indian cryptocurrency exchanges Named after a meme of the Japanese dog breed Shiba Inu and with supporters including Tesla’s Elon Musk , the cryptocurrency has risen over 10X in the last three months, with its market cap standing at almost $80 billion on Thursday.Indian cryptocurrency exchanges are now witnessing record-breaking trading volumes of Dogecoin, causing massive surge in traffic on these platforms.On Wednesday, Binance-owned WazirX ’s Doge/INR trading slowed its system as the platform saw record traffic that it did not have the capacity to support.Soon, #WazirXScam trended on microblogging Twitter, as users complained of unexecuted Doge trades.CoinSwitch Kuber, backed by Sequoia Capital and Tiger Global, registered 200% growth in Dogecoin volumes month on month, with a jump of 1300% for Dogecoin in the last two weeks alone.Dogecoin’s volumes and prices are also peaking across the world on the much-anticipated appearance of Musk on an American TV show on May 8.Musk has hinted at discussing Dogecoin during his appearance on Saturday Night Live, driving retail investors to invest in the crypto asset.Active traders on WazirX jumped by 123% in April and have been consistently growing on other platforms like CoinDCX.Nischal Shetty, founder of WazirX, said the platform is being re-architected to deal with the expected surge on May 8 that could double or triple from Wednesday’s peak.Shetty estimates that Dogecoins worth Rs 600 crore have been traded on the platform in the last 24 hours. On Coinswitch Kuber average daily volumes have been around Rs 100 crore in the last two weeks.Most Indian crypto exchanges have listed the token, although some like ZebPay have steered away despite investor interest.“We may list it, but first I’d like to be sure it isn’t just the Tulip Mania of the 21st century,” said Vikram Rangala, COO of ZebPay, referring to one of the most infamous market bubbles and crashes of all time in the 1600s.Unlike other cryptocurrencies that are either in limited circulation – making them a storehouse of value - or have use cases like smart contracts, Doge’s use cases have been limited to tipping on Twitter and Reddit for quality content.Its official website describes the currency as “an open-source peer-to-peer digital currency, favoured by Shiba Inus worldwide.”There are over 129 billion Doge tokens in circulation, according to Coinmarketcap.com, and more can be mined.Nithin Kamath, chief executive of online brokerage firm Zerodha, said a lack of regulations in crypto leaves the industry susceptible to manipulation, unlike strict regulations on capital markets that make it easier to track trading activities which artificially inflate the price of a stock.“I can’t really make any sense of what is happening with Dogecoin,” Kamath said. “With no checks in place, the risks of some of the currencies like Dogecoin being a pump and dump scheme is quite high. I think the best way to play it is by not allocating more than 1%-5% of your liquid net worth to assets where the speculative activity is quite high,” Kamath said.The best way to protect investors from a risky asset class like Doge is to restrict trading of the asset to high net-worth individuals and blockchain experts, said Mathew Chacko, partner at Spice Route Legal.The majority of crypto traders in India are under 25.Users say that if enough people ascribe value to the cryptocurrency, then the token ends up becoming valuable for that community, and use cases eventually arise.“I don’t want to sell my Dogecoins, whatever happens,” said Siddharam Ishwarkatti, a 42-year-old engineer working for a multinational firm who started investing in cryptocurrency this year. “Even if it goes to 100, I will not sell it. These currencies might have a future. Bitcoin had zero value when it started.”Dogecoin is an initiation token into the crypto universe for several new users like Ishwarkatti and 19-year-old Mrityunjaya Lala, who want to invest limited resources.The fear of missing out and the thrill of owning a meme stock as well as the heavy influence of Tesla’s Musk is driving many new traders to Dogecoin, even though they may not fully understand blockchain technology.Priyanshu Singh, a 19-year-old B Tech. student from Kanpur, is also hoping to use his profits from the Dogecoin rally to invest in more stable coins like Ethereum and Bitcoin eventually.Long-term believers in crypto’s future and blockchain technology say that Dogecoin distracts people from the true value of crypto because it makes the industry about quick returns.Dogecoin has peaked and slumped in its almost 8 years of existence, depending on external influences such as a community of Dogecoin Redditors supporting Sochi Olympics players in 2014 who lacked funds, to influential people adopting and promoting the token.The most recent peak was in January when Musk tweeted a faux “Dogue" magazine cover. Discussion on the cryptocurrency surged on WallStreetBets, the Reddit forum responsible for GameStop’s stock price hike.Several industry experts have drawn parallels between the current surge in Doge’s prices and the GameStop short squeeze earlier this year.“I think Dogecoin, like GameStop, is one of those markers of social movements that are breaking age-old concepts of what defines money,” said Tanvi Ratna, chief executive of think tank Policy 4.0. “What appears like frivolous games are drawing serious amounts of real money and challenging ideas around the legitimacy of money always coming from the state. This dynamic worries most governments.”The now-famous GameStop short squeeze has propelled the stock of the video game retailer to nearly $160 as of Wednesday, rising by more than 30x year-to-date.Rating agency S&P Global Ratings on Wednesday also raised the stock’s credit rating from B- to B.“While the risks associated with investing in Dogecoin are many, the framework does not provide legally viable recourse,” said Anu Monga, Partner, AnantLaw, and an expert in technology regulations. “Owing to the volatility of Dogecoin, the financial regulator of the UK has clearly warned people investing in crypto assets such as Dogecoin to do so at their own risk.”Currently, in India, there is no legal framework to address private cryptocurrencies.The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which provides for an official digital currency to be floated by the RBI, is under consideration by the government.

Crypto check: Looking Beyond the Dogecoin Hype

ET Spotlight Special

Bitcoin underwent halving in May 2020, a phenomenon that reduces the supply of new Bitcoins in circulation ending up rallying its prices.

A massive institutional adoption drove its price where companies like Greyscale, MicroStrategy, Tesla etc turned to it.

Covid to some extent also helped fire up Bitcoin investing.

It all started after the entire GameStop incident. A bunch of retail traders got together on Reddit and decided to push up its share prices. Taking a leaf from the same book, a subreddit with DOGE fans decided to also rally DOGE’s price to make it touch $1.

The pump was further amplified by influential personalities like Elon Musk, Gene Simmons, Carole Baskin etc., on Twitter.

ET Spotlight Special

After Bitcoin, crypto investors and media houses have a new favourite in town; Dogecoin. The cryptocurrency has attracted a lot of eyeballs because of its surge. It grew over 5000% in 2021, with a 400% gain in just 30 days. These sky-high gains have stirred up many investors to buy into DOGE, a result of which is evident on platforms like CoinSwitch Kuber that are experiencing boosted engagement from its users. But is this cryptocurrency really worth the hype? Let’s find out.Before Dogecoin, Bitcoin, too, rallied aggressively, touching new highs almost every other day, luring investors into the cryptocurrency space. While both of these incidents might look similar on the surface, they aren’t really similar.Bitcoin is a long-trusted and reliable cryptocurrency. It paved the way for other cryptocurrencies that we have around and was created by the best of the minds with a definite purpose to improve on paper money’s shortcomings. More importantly, it was very well thought of, keeping in mind its security, supply, and other factors.On the other hand, Dogecoin was created back in 2013 by Jackson Palmer and Billy Markus as a joke inspired by the meme dog, Shiba Inu . They intended to dig at investors who invest in assets mindlessly, which is, ironically, exactly happening right now.And since the founders didn’t really have any other intent but to have fun with the crypto, they aren’t likely too serious about it. At one point, they even tried moving away from the project.Cryptocurrencies derive much of their value from the underlying project it is attached to. Most cryptocurrencies are associated with a project on the blockchain network trying to solve real-world problems. As these projects prove their efficiency and gain popularity, it channels its value to the native token of the project, a cryptocurrency.For instance, BAT token is cryptocurrency attached to a project called Brave browser on the blockchain. The purpose of Brave browser is to price user attention correctly and compensate people for viewing ads. As the project develops and gains more traction, you will also notice the price of the cryptocurrency attached being influenced.No matter how good the idea is, a bad team will not be able to pull it off, but a good team can take projects through the roof.As much as it is important to have a robust project attached to crypto, the team working on the idea is equally important. Additionally, knowing the team allows you to get a sense of their expertise and the goodwill they may bring to the table. It also works as a background check to ensure that the project is trustworthy.For example; The founder of Tron, Justin Sun, brings a lot of credibility to the project and builds trust because of his technical expertise.Another factor that you might want to consider while evaluating a cryptocurrency is its availability. It’s pure economics here; the greater the demand for an item and the lower the supply for it, the higher the price of an item and vice versa.Think about it, one of the fundamental reasons driving Bitcoin’s price is its scarce nature. There can only ever be 21 million Bitcoins, and while the supply for it is shrinking every day as more and more people invest in it, the demand for it is increasing.While Dogecoin, on the other hand, does not have any such limit on its supply, there can be infinite DOGE coins.This is also one of the important aspects to look at in order to speculate where a cryptocurrency is heading. It helps investors to ascertain how a cryptocurrency behaves in certain situations. One might have done their research on the all above areas but studying the market behaviour could put them one step ahead.Studying the past performance of a cryptocurrency may help investors forecast its future. But one thing to be wary of while analysing the trends is that these could be sometimes influenced by pump and dump strategies, also like what we are experiencing with DOGE now.Investing in Crypto is no different than stocks; it’s the same ball game. People fail when they think of crypto as a ‘ get rich quick’ scheme because it’s not.Like how one researches a stock thoroughly before investing, they shall also research the crypto they are investing in. It’s almost all the same drivers here too. The only difference is that the market is a little more volatile.Also, crypto investments can start from a minimum amount of Rs.100 with cryptocurrency platforms like CoinSwitch Kuber . Investors could see success with cryptocurrencies if they are prepared and disciplined with their investing strategy and are not just trying to make a quick buck.The above content is non-editorial, and TIL hereby disclaims any and all warranties, express or implied, relating to the same. TIL does not guarantee, vouch for or necessarily endorse any of the above content, nor is responsible for them in any manner whatsoever. The article does not constitute investment advice. Please take all steps necessary to ascertain that any information and content provided is correct, updated and verified.