Dogecoin is in the headlines thanks to Elon Musk’s highly anticipated “Saturday Night Live” hosting gig over the weekend, which was followed by the cryptocurrency losing a third of its price. Launched in 2013, Dogecoin is a crypto based on an internet meme of a Japanese dog and started as a parody of Bitcoin. Like its cryptocurrency peers, Dogecoin can be used as a form of payment, although its prevailing use case has been as a tradeable asset on platforms like Robinhood and eToro.
Dogecoin’s boom is marred with confusion among financial analysts, while many retail investors just find it funny. The recent surge in retail cryptocurrency adoption combined with celebrity backing, most prominently from Musk, has sparked record demand for the joke crypto. But despite its rising adoption, financial analysts struggle to make heads or tails of the whole affair, as Dogecoin has very limited uses, even by cryptocurrency standards. The crypto lacks market infrastructure with no institutional Dogecoin custodians or brokers, and it sees no meaningful developer activity, per a Galaxy Digital Research report. By contrast, more than 300 new developers per month join Ethereum projects. Thus, Dogecoin’s popularity likely owes to holders' love of memes and nihilistic enjoyment of perplexing the markets. In fact, more than 44% of crypto holders in the US and UK say they own cryptocurrencies just for fun, the second-most cited reason after using them as growth investments.
Dogecoin’s popularity presents strong user acquisition opportunities for trading apps, but they’ll need adequate consumer protections in place or risk regulators’ ire.