By Samuel Indyk
Investing.com – Dogecoin continues to hold onto gains and briefly traded above $0.42 as a buzz on social media and chatrooms keeps the price elevated.
The often-mocked cryptocurrency has risen from a low of around $0.06 at the beginning of April to its new record as traders celebrate ‘Dogecoin Day’.
‘Dogecoin Day’ has trended on Twitter today, 20th April, or 4/20 in US date format, a day that is often celebrated by Cannabis smokers. Some fans of the cryptocurrency are targeting getting the coin to $1.
In the last week, the price of Dogecoin has risen by over 450%.
The move has echoes of the GameStop (NYSE:GME) craze seen in January this year that saw shares rally from a low of $19 at the start of the year to a high of $483 less than a month later.
“Dogecoin has bounced higher, fueled yet again by chatter across internet forums, with influencers pushing the crypto currency higher,” said Hargreaves Lansdown (LON:HRGV) senior investment and markets analyst Susannah Streeter. “As we saw with the GameStop frenzy earlier in the year, traders have once again adopted a game mentality, trying to propel the price higher using hashtags and rallying cries on internet forums.”
A word of caution
As was the case with GameStop, the gains in Dogecoin are not expected to last forever. The memecoin, which is now the fifth largest cryptocurrency, has a market cap of around $50bln. That’s larger than UK bank Barclays (LON:BARC).
“Investors should be extremely cautious about getting caught up in this herd mentality because Dogecoin is very much a speculative bet whose valuation has no reliable basis,” Streeter added.
“Demand has come from traders trying to ‘game’ the system and others hoping to benefit from future price rises rather than use the coins as a means of exchange.
"Predicting the point at which demand subsides and prices begin to fall is very difficult, if not impossible and people risk getting their fingers seriously burnt.”