The cryptocurrency landscape is becoming absurder than ever. New projects with weak fundamentals driven by the social media effect are regarded as “solid projects.” A cryptocurrency project that started off as a joke breached the Top 4 coins by market capitalization, whilst Ripple, a payments settlement system, is challenging a fatiguing SEC lawsuit that could change the cryptocurrency market from a legal standpoint.
Mass media is diverting is covering cryptocurrency news items, which are bestowed by the audience as important. Dogecoin, a meme guild cryptocurrency that portrays a smiling Shiba Inu, has surpassed companies such as Twitter and Ford. With a market capitalization of over $87 million, the coin is eying the Top 3 ahead of Elon Musk’s appearance on Saturday Night Live on May 8th.
Social Media Influence
2021 has been an atypical world in terms of financial products and investments. Fueled by distrust in governmental institutions, millennials, and Gen Z explore alternative means of regaining control of their financial status. Social media enables participants to share ideas and thoughts by creating network communities. Reddit, Facebook, Twitter, or 4Chan facilitate a vertical and horizontal propagation of information. As such, information is disseminated with ease, regardless of the quality.
An unregulated market is susceptible to social media influence, disrupting both knowledgeable and unknowledgeable entities’ perception of quality and can work contrary to its intentions. Elon Musk’s support fuels the rise in DogeCoin’s price through his Tweets. Additionally, Edward Moya highlighted that the DogeCoin bubble “should have popped by now”; however, institutional interest has fueled the DogeCoin army to incite the price to higher highs.
According to Fear & Greed Index, on May 4th, the market holds the border between greed and extreme greed. This also coincides with DogeCoin’s surge in price to a new all-time high of over $0.60. What’s more is that eToro added DogeCoin to their platform, which puts more fuel to the Doge fire. eToro stated they added DOGE “due to strong customer demand,” which could be due to emotional funding from retail. Doge’s price increased by 11.000% since the beginning of the year; however, Analysts caution investing in Doge first before investing and understanding more about the blockchain space.
On the Flipside
- Buying DogeCoin at the top could backfire on investors and could hinder future investments by new investors
- DogeCoin filling BNB would prompt more regulatory measures in the crypto space.
- The success of a joke coin could hinder the legitimacy of the future of the blockchain space and reenact the fears of a new crypto bubble.
A New Character For Crypto Investors
The profile of crypto investors has drastically changed since 2017. Memes are the current retail investor’s “second language,” said Diana Biggs, CEO of Valour. Furthermore, new projects on Binance Smart Chain or Ethereum portray cartoonish branding. Although their branding doesn’t mimic their value, it does showcase the audience to which they are intended. New crypto investors are self-thought; however, only 16.9% of investors fully understand the market, thus creating the market discrepancies between meme projects and functional and useful blockchain projects.
In contrast, while DogeCoin, a project that started off as a “joke,” is gaining mass exposure as a measure in the Blockchain space, Ripple faces the consequences of adding value to financial businesses. Ripple Labs’s lawsuit entailed the company “paused” their partnership with MoneyGram and is under investigation by the SEC.
The Ripple vs. SEC lawsuit saga is far from over. Ripple Labs is gaging media attention as the dispute could reshape “SEC’s stance on cryptocurrencies.” Yet, the media attention is not as prosperous as DogeCoins’s. Still, XRP, despite delisting from several exchanges in the US, the price of the token has gained momentum in the past months, as favorable news about XRP gained media exposure.
To that end, new crypto investors are more eager to generate big financial gains while taking substantial amounts of risks. The DogeArmy, who’s pushed the price of the token to new highs, can be cataloged as retail investors, could backfire on new investors. Focus is directed towards the flashy and hype projects that refer to financial gains and not the functionality of the network. Investors often over leverage the coin’s financial rewards over its fundamentals, which could leave them with empty pockets.