TikTok users send value of 'joke' cryptocurrency soaring

Price of Dogecoin up 40 per cent in 24 hours as users post videos urging others to buy

Users of Bytedance's TikTok social network have been attempting to push up the price of the Dogecoin cryptocurrency towards $1. It currently sits at $0.0039. AFP

As TikTok users spend more time at home, their priorities appear to have shifted from whipping up the perfect Dalgona coffee to manipulating the crypto market. Enter, the Dogecoin Challenge.

Dogecoin is a cryptocurrency jokingly established in December 2013 that features the bygone Doge meme as its logo. Among the latest in an endless series of TikTok trends, users are encouraged to invest in the currency, acting under the assumption that there is serious money to be made if the coin’s price hits $1. It currently sits at $0.0039.

According to OnChainFX, a site that tracks cryptocurrencies, Dogecoin has surged by over 40% in the last 24 hours, but even the owner of the Dogecoin Twitter account is warning investors to be cautious, tweeting: “Be mindful of the intentions people have when they direct you to buy things. None of them are in the spot to be financially advising.” The token’s market capitalization has reached almost $500 million.

Videos proselyting Dogecoin have been popping up for days on the platform known for its short but quirky and catchy video compilations. Some Dogecoin fans say the whole phenomenon might be a “crazy thought” while others have been more blunt, prodding users to “all get rich,” and to “tell everyone you know”. One user slowly zooms onto a paper prototype of the coin with “Fly Me to the Moon” playing in the background. Another says that “if this keeps trending on tiktok this might actually be my saving grace”.

Justin Litchfield, who is the chief technology officer at Texas-based ProChain Capital, a crypto hedge fund, says there are two trends at play: One is the hordes of people stuck at home who have been buying stocks on apps like Robinhood and who might now also be dabbling in crypto. The other is the repeat phenomenon of Dogecoin investors getting together to do a “pump and dump for kicks”. Take, for instance, April 2019, when the currency saw double-digit gains in a similar fashion.

“This has a strong history of having done this,” said Litchfield. “The whole currency was started as a joke to make fun of the financial system, which is bizarre to think about.”

Though Bitcoin, the largest cryptocurrency, has traded in a narrow range over the past month, many alternative coins, or altcoins, have ripped higher, prompting calls of another “alt season” when smaller tokens see an increase in attention. Zcash, for instance, has gained more than 100 per cent since mid-March.

To Mati Greenspan, founder of Quantum Economics, Bitcoin’s trajectory has been closely tied to moves in the S&P 500 – while the rest of the crypto market “is detaching itself”. Crypto traders, like their stock-picking counterparts, are becoming very selective.

“It seems like people are eager to speculate at the moment – and we have all this stimulus in the system and all that stimulus is going to investments,” Mr Greenspan said by phone.

“It would make sense that a lot of this is coming from the retail market.”