Facebook Twitter

Why are meme cryptos Shiba Inu and Dogecoin surging right now?

SHARE Why are meme cryptos Shiba Inu and Dogecoin surging right now?
This mobile phone app screen shot shows the logo for Dogecoin, in New York, on Tuesday, April 20, 2021.

This mobile phone app screen shot shows the logo for Dogecoin, in New York, Tuesday, April 20, 2021. Dogecoin, and Siba Inu are surging after a long slide, analysts say.

Richard Drew, Associated Press

Feel free to insert whatever doggy-themed metaphor floats your boat but memecoins Shiba Inu and Dogecoin had a tail-wagging weekend following a surge in retail investor interest that drove some of the biggest value increases in months.

Emerging from the dog days of summer: Dogecoin is up over 12% in the last week and has moved into the top 10 most valuable cryptocurrencies by market capitalization according to CoinGecko. Over the same period Shiba Inu has surged by over 30% and is just a couple clicks below Dogecoin in the No. 12 spot on the crypto market value list.

Both digital tokens trade for relatively tiny sums, with one dogecoin worth $0.077511 and Shiba Inu tokens trading at $0.00001572 on Monday morning, according to CoinGecko. But, thanks to the massive volumes of both virtual currencies, they enjoy market values of $10.3 billion and $9.3 billion, respectively.

Retail investors appear to be reacting to some easing in rough economic conditions, including a slight drop in brutal U.S. inflation rates reported last week. Trading volumes for both Dogecoin and Shiba Inu were well north of their daily averages over the weekend but were cooling early Monday as valuations eased slightly.

Dogs on bobsleds: The global cryptocurrency market was knocking on the door of a $3 trillion valuation in late 2021, helped out by retail traders feeling flush, thanks in part to widely distributed stimulus subsidies aiming to bolster the impacts of the COVID-19 pandemic.

But those peaks were followed by a precipitous decline that brought that global value down to under $900 billion in late June. The big drops closely mirrored what was happening in broader markets as progressively gloomier economic conditions drove investors away from risky bets.

While once touted as a savvy hedge against inflation and the fickle swings of equity markets, cryptocurrencies have, instead, turned out to be more similar than not to good old speculative stock trading.

Back in June, amid the epic backslide in cryptocurrency values, Jamie Burke, the CEO of crypto venture fund Outlier Ventures, explained that crypto markets were behaving exactly like legacy stock markets and the two were moving in lockstep because the lines between them have blurred, according to Wired. The vertiginous price highs and feverish hype around crypto have sucked in a lot of new money as institutional and retail investors spend their stimulus money on stock trading platforms like Robinhood.

“Digital assets began to be linked to the wider macro environment,” Burke told Wired. “There’s a whole lot of money that came into the financial system. They began to use that to speculate, and so crypto definitely benefited from that. But similarly, when the wider macro environment changes you see that negatively reflected in digital assets.”

On a walk or a run? The world crypt market has been inching up since wallowing in June’s value trough and stood at just over $1.2 trillion on Monday. Crypto heavy-hitters Bitcoin and Ethereum are also riding value gains and on Monday were up 4.5% and almost 13%, respectively, over the past week. Industry watchers say Ethereum’s much-anticipated platform upgrade, Merge, is helping drive fresh optimism in a market best known for its wild volatility.

According to a Bloomberg News report, Hayden Hughes, chief executive of social-trading platform Alpha Impact, said there is a wave of optimism over continued gains for the doggy-themed coins as they, like Ethereum, are due for upgrades.

“Dogecoin and Shiba Inu have both broken out over the weekend, clear evidence that the retail investor is back,” Hughes told Bloomberg.