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Reminiscent of the late 2017 ICO craze, a large number of new small-cap cryptocurrencies are gaining market caps in the millions of dollars – for seemingly no reason. Most of them appear to be forks of each other, promising great things but never really delivering and derive their value from hype alone.
DOGE: The King of Useless Altcoins
Dogecoin, which was created as a joke, has amassed a market cap of almost $100B, which was considered virtually impossible 2 years ago. DOGE’s meteoric rise has been fueled by Elon Musk, who has continued his habitual tweeting about the meme currency and is set to host an SNL episode tonight.
DOGE has cleared the air for meme/joke currencies as a genre: it has proven that something with little to no real-world usage can skyrocket to insane valuations simply because people collectively believe in its value. As a result, thousands of useless tokens are deployed every day on networks like Solana and Binance Smart Chain – hopefully looking to become the next Dogecoin.
Massive Gains on Copycat Coins
Shiba Inu (SHIB), a token inspired by DOGE, is up around 500% this week – and it has no fundamental underlying product, except for a massively hyped-up community and large purchase volume.
Its website reads that it’s intended to be a “Dogecoin killer” and that users can hold billions or even trillions of the token – highlighting its massive supply. There’s also a decentralized exchange called Shiba Swap, which is not even launched yet, but this hasn’t stopped people from rushing in and buying the token.
The gigantic gains being made on these copycat coins (which are trivially easy to create, with a single fork button and deployment transaction) far eclipse even the ‘meme/volatile’ currencies like DOGE, let alone more secure risk-adjusted investments like BTC or ETH. The vast majority of currencies that see similar gains often end up popping – for example, WRAFT INU, a recent DOGE-inspired fork on BSC, is down over 95% from its highs.
Without an original product, solid underlying fundamentals, or a valid use case, the destiny of most of these coins is to asymptotically trend towards zero. When this will happen remains a mystery since it’s hard to judge the phases of market cycles while within them.