Zack Voell


Social media has thrown dogecoin traders a treat.

Trading volumes for the Shiba Inu meme-based cryptocurrency spiked nearly 2,000% in the last two days, according to data from Messari, as videos on TikTok encouraged users to invest. The whimsical asset’s price climbed 35% to $0.0035 over the same period.

Dogecoin is a “joke cryptocurrency,” according to one of its founders, Jackson Palmer. As such, impromptu social media-based frenzies may be a fitting use case. Daily volume for the cryptocurrency stayed well below $5 million for the past two months.

“The recent rise of dogecoin, a meme coin, should serve as a reminder to everyone in the space that the most popular use case for crypto is still purely speculation,” said Anil Lulla, former analyst at Bloomberg and co-founder of cryptocurrency research firm Delphi Digital.

Global search interest in “how to buy dogecoin”

Aggregate daily trading volume for dogecoin in 2020
Source: Messari, CoinDesk Research
also skyrocketed from a score of 25 to 100, the highest possible search popularity score, over the past few days, according to 12-month Google Trends data analyzed by CoinDesk.

Some of the videos on TikTok, a newly popular social media platform, garnered more than 100,000 “likes,” while all videos with the “dogecoin” hashtag amassed several million.

For speculators and meme aficionados, dogecoin offers a different value proposition than other cryptocurrencies, according to Qiao Wang, an independent cryptocurrency trader formerly at Tower Research. The value of most top cryptocurrencies “comes from monetary premium,” said Wang. “Dogecoin’s value comes from memetic premium.”

UPDATE (July 8, 2020 20:07 UTC): This article has been updated to reflect that dogecoin’s price appreciated to $0.0035, not $0.035 as was originally stated.

Author: Zack Voell

Source: Coindesk: Dogecoin Volumes Spike 1,900% in 2 Days Amid Viral TikTok Videos

Bitcoin showed its luster during the first half of 2020 by rallying more than 27% percent amid mediocre returns from precious metals including gold, silver and platinum.

Gold underperformed bitcoin by nearly 11 percentage points despite gaining 16 percent in the first half of 2020 and making eight-year highs in late June. Silver and platinum both finished the first half of 2020 with negative gains.

Bitcoin’s strong performance is no shock to some analysts, especially in context of the benchmark cryptocurrency’s increasing correlation with equity markets. “Given that equities are now near, or in some cases above, their highs reached in February, it’s not surprising to see bitcoin do the same,” said Ryan Watkins, bitcoin analyst at Messari.

Bitcon and precious metals returns during the first half of 2020
Source: Messari, Federal Reserve Economic Data, Business Insider, CoinDesk Research

Why compare returns from bitcoin to gold or other precious metals? “Gold is bitcoin’s most aspirational asset,” explained Watkins. “Like bitcoin, gold is a scarce commodity whose value is derived almost entirely from its monetary premium.”

Unlike gold, however, bitcoin investors have historically experienced more extreme volatility. Silver and platinum were also much more volatile than gold through the first half of 2020.

Bitcoin and gold could be seen more like complementary investments than competitives ones based on their performance over the past six months, said David Lifchitz, managing partner at Paris-based quantitative cryptocurrency trading firm ExoAlpha. Given bitcoin’s historic volatility, holding “digital and physical gold together” could provide a better risk-return profile than holding either of them individually, said Lifchitz.

Investors typically adjust their portfolios based on the amount of risk required to achieve a certain return. Increased returns often bring with it higher volatility or risk. Depending on how assets correlate, though, a properly weighted portfolio can achieve a higher expected return with a lower level of risk than would be found in a portfolio containing just one asset.

Investing in bitcoin and the less-volatile gold during the first half of 2020 could have reduced an investor’s risk without sacrificing returns, Lifchitz told CoinDesk. Equal investments in gold and bitcoin, for example, could have more or less matched returns from an investment only in bitcoin while suffering less of a drawdown in March, Lifchitz explained.

Bitcoin and precious metals quarterly returns during 2020
Source: Messari, Federal Reserve Economic Data, Business Insider, CoinDesk Research

But risk-adjusted returns from bitcoin and gold over the last six months “may not hold true going forward,” said Lifchitz. For one thing, the cryptocurrency market has grown eerily quiet over the past few weeks as bitcoin’s volatility has plummeted.

A Bloomberg July report on bitcoin noted bitcoin’s 260-day volatility is “at the lowest versus the same gold-risk measure since the crypto asset’s parabolic 2017 rally.” Senior commodity strategist Mike McGlone, who authored the report, said, “Volatility should continue declining as bitcoin extends its transition to the crypto equivalent of gold from a highly speculative asset.”

Bitcoin’s dropping volatility to historic lows could quickly change directions, however. McGlone described bitcoin as a “resting bull” ready for a breakout, adding, “We expect recent compression to be resolved via higher prices.”

Author: Zack Voell

Source: Coindesk: Bitcoin Up 27% in First Half of 2020, Beating Gold, Silver and Platinum

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