Dogecoin has seen its price rise by a factor of five over the last week. Yesterday, it was trading at $0.13. Today, it’s one of the world’s 10 most valuable cryptocurrencies, with a market capitalization of $45 billion. Ars Technica’s Timothy B. Lee writes: Dogecoin’s price tripled over the next 36 hours. My editor suggested that I write about whether Dogecoin’s rise is a sign of an overheated crypto market, but for a coin like Dogecoin, I’m not sure that’s even a meaningful concept. Dogecoin isn’t a company that has revenues or profits. And unlike bitcoin and ether, no one seriously thinks it’s going to be the foundation of a new financial system. People are trading Dogecoin because it’s fun to trade and because they think they might make money from it. The rising price is a sign that a lot of people have decided it would be fun to speculate in Dogecoin.
Of course, the fact that lots of people have money to spend on joke investments might itself be a result of larger macroeconomic forces. The combination of stimulus spending, low interest rates, and pandemic-related saving means that a lot of people have more money than usual sitting in their bank accounts. And restrictions on travel and nightlife mean that many of those same people have a lot of time on their hands.
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