On the ‘hunt’ for the new dogecoin: its 12,000% yield drives investors to look for another digital ‘vein’

If the bitcoin numbers are overwhelming, the dogecoin numbers are beyond logic. and that really has no clear utility beyond speculation, it has risen 12,000% so far in 2021. The high price of the main cryptocurrencies, bitcoin and ether, has made many investors, especially young retailers, opt for a token that this week reached its all-time high: 69 cents. This frenzy around the dogecoin has had another derivative: many are launching the ‘hunt’ for the next still almost unknown digital asset with which to hit the ‘punch’. A certainly dangerous derivative.

In a climate of abundant liquidity and with retail investment at hitherto unknown levels – Joe Biden’s stimulus checks in the US are in his hands – nothing stops the frantic search for the miracle. With a dogecoin already ‘too’ famous, those seeking easy overnight fortunes turn their eyes to newer digital assets like DigiByte, VeChain and SafeMoon.

These are bets fueled by rumors and speculation in forums and chats, . Also contributing to the frenzy are messages of support from celebrities who set themselves up as gurus on the subject. Beyond the ‘usual suspects’, see Elon Musk and Mark Cuban with dogecoin, for example, rapper Lil Yachty, with five million followers on Twitter, tweeted last month presuming that he had anticipated the rise of SafeMoon. YouTuber Jake Paul also promoted the cryptocurrency to his nearly four million followers.

The truth is that SafeMoon has appreciated more than 20,000% since its launch in March, trading at more than one hundred thousandth of a dollar, with a market value of about 3.7 billion dollars. The cryptocurrency is designed to reward the people who own it: anyone who sells SafeMoon receives a 10% commission, and part of that commission is redistributed to current holders.

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The Wall Street Journal recounts in a report the case of Caleb Paul, a 35-year-old US citizen who works in the construction sector in Louisiana. He started trading cryptocurrencies this year and invested $1,000 in SafeMoon last month. His plan is to hold the investment for a while in hopes of seeing the price hit 1 cent.

Stephen Roach, a 39-year-old London-based cinematographer whom WSJ reporters have spoken to, sums it up perfectly: “It doesn’t have to hit $50,000 a coin to change your life because it’s below a dollar. All you need is to come up with 10 dollars.”

In his case, after losing money with ripple, a cryptocurrency already considered among the ‘veterans’, Roach started buying VeChain last year. His investment of approximately $950 is now worth $71,000, as a wave of new buyers has piled up around this Chinese-originated crypto project in recent weeks. VeChain’s price has risen over 900% this year, giving it a market value of around $13.3 billion. The tokens were trading on Thursday at about 21 cents per unit.

The phenomenon is not new, although perhaps it is more aggressive. If at the end of the 90s the euphoria around dotcoms ended as it did, in 2017 the pull of bitcoin gave rise to a certain hysteria around the previous generation of altcoins such as Litecoin or Bitcoin Cash and a few smaller ones such as PinkDog, MagicCoin and BitSoar.

An enthusiast: “Dogecoin has shown that hype makes money”

The situation creates some tension for the experts. “It really does look like a slot machine,” says Susannah Streeter, senior investment and markets analyst at UK-based asset manager and stock trader Hargreaves Lansdown. “They’re thinking: Which one is going to make me a quick buck six months from now? It’s based on speculation, not the underlying value of that coin.”

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Many of these digital assets are also illiquid, notes Charles Hepworth, chief investment officer at GAM Investments. When sentiment reverses, many inexperienced investors may find they can’t get out of their bets or get their money back, he explains. In the end, it is likely that the authorities intervene with taxes or regulations that take the air out of these markets, he adds before issuing a final warning: “Once there is a massive stampede out, you will not be able to get out.”

Streeter also criticizes that the main claim is how cheap these cryptocurrencies are in their origins: “Cheap does not mean a bargain, it is only a bargain if it goes up. If it is cheap, it is also potentially cheap because it is worth nothing.” This does not seem to convince enthusiasts like Paul, who even sees a good side to the high volatility of these tokens, logically greater than that of bitcoin: “They can fall by 25% on the same day they rise again, and that is exciting”. He is clear about it, he has also invested in VeChain and his mantra is: “Dogecoin has shown that hype – artificial expectations created around something – makes money.”

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