On Thursday night, just before 10 p.m., I got a text from a friend: “Yo, what is going on with dogecoin?” he wrote. “But like do I sell now? This shit makes no sense.”
He was, of course, talking about dogecoin, the cryptocurrency created as a joke in 2013 — a satire of sorts, based on the Shiba Inu meme, parodying the slew of bitcoin-copycat currencies that were flooding the market (and are sometimes called “shitcoins”). And he was referencing dogecoin’s gravity-defying price, which started the year at about half-a-penny per coin, rose to a whole nickel during late January and early February’s GameStop mania — propelled in part by Tesla CEO Elon Musk’s encouraging tweets — and this week multiplied several times over. By Thursday night, dogecoin was worth a bona fide quarter; by Friday morning, it was up to nearly a half-dollar. Dogecoin, now trading a bit under 30 cents, has surged over 300 percent in the past week, according to coinmarketcap.com, with no explanation in sight.
I kind of thought my friend was joking too: After all, you probably don’t invest in a parody because you’re banking on the returns, but because you bought it as a lottery ticket. How much could he possibly have in dogecoin that would make a difference whether he held or sold?
He sent back a screenshot of his Robinhood portfolio, showing more than $30,000 in dogecoin, a return of 521 percent since he’d bought in at a little more than four cents a piece. “But this is a serious number for a meme coin haha,” he wrote.
And therein lies the doge dilemma: what started as a joke has now, through no virtue of its own, reached Wall Street–like proportions of the kind that require some degree of seriousness. With a total market value of around $40 billion, dogecoin is worth roughly as much as the Ford Motor Company. No matter that dogecoin’s founders designed it to be devoid of value, omitting a cap on the amount of new dogecoin that can be made (a supply limit characteristic of more respected cryptocurrencies such as bitcoin). The cryptocurrency has confounded its own blueprint, upending its creators’ assumptions that just because something shouldn’t be valuable, it won’t be.
Dogecoin has become an emblem of the new school of meme investing, the trend that has helped drive up the stocks of GameStop and other nostalgic brands like AMC. Together they’ve flipped the traditional concept of value on its head: Forget any sort of reasoning about what makes a sound investment; today, anything can be worth something if enough people say it is. It worked for GameStop, and it’s working for doge.
In the end, my friend sold half his dogecoin late Thursday night; by Friday morning, as the cryptocurrency went up nearly another 50 percent, he was calling that decision a “huge mistake.” Then again, it wasn’t clear he would have been able to sell at the high anyway; amid the doge craziness, Robinhood — one of the only mainstream brokerages offering dogecoin trading, as Coinbase does not — was experiencing a crypto-trading outage shortly after 10 a.m. Friday.
I asked him, why all the concern over how much money he made on dogecoin? Did he really go into this with high expectations? He’d had a bit of cash to play with, he explained, and so he employed what some people have called the YOLO trade: “Very likely I lose money,” he thought in the beginning, at the end of January. But there was also an element of “gambling” fun in the back of his mind: “This could ‘go to the moon’ and I make 3-4x my money” in a year’s time, he told me. In the end, he did even better, faster — taking away a moral that logically maybe shouldn’t be possible, and yet, is. On Saturday morning, he put $2,000 more into dogecoin.