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A cryptocurrency investing sub-Reddit appears to have orchestrated the latest dogecoin (doge) price rally.
Coordinated buying pumped doge to a new all-time high around $0.07 before profit-taking saw it briefly drop by 50% at one point.
The doge price rally followed the recent Wall Street versus Main Street battle over GameStop (GME) stock. Redditors aware of hedge fund efforts to short the equity bought the stock en masse, performing an epic short squeeze and causing around $70 billion in Wall Street losses.
Dogecoin Pumps Following GameStop Fiasco
Dogecoin originally started as a light-hearted play on a popular meme in 2013. That didn’t stop it from rallying over 800% between Thursday and Friday. The move has propelled doge into the top ten crypto’s by market cap, according to CoinGecko.
Orchestrating the price pump was the sub-Reddit SatoshiStreetBets. The more than 100,000 member group describes itself as ‘the crypto version of WallStreetBets.’
WallStreetBets is a separate finance sub-Reddit that focuses on traditional trading and investing. The almost 6 million-member group grabbed headlines this week by coordinating the above-mentioned short squeeze.
As CNBC reports, during the lead up to the pump, one member of SatoshiStreetBets described doge as the ‘crypto GME.’ Others encouraged the group to ‘keep pushing’ up the price.
Adding fuel to the fire was eccentric Tesla CEO, Elon Musk. Already a known fan of doge, Musk tweeted a picture of a front cover for the fictional ‘Dogue’ magazine – a play on Vogue.
pic.twitter.com/a6kmk0PEgM
— Elon Musk (@elonmusk) January 28, 2021
Naturally, the Redditors interpreted Musk’s tweet as support. One commented, ‘Mr. Musk is with us.. to the moon.’
What Goes Up…
Both GameStop stock and doge have since retreated from their all-time high prices set this week. The aggressiveness of the moves, coupled with some rather poor fundamentals, likely made the blow-off tops inevitable.
After rising to almost $500 on Jan. 27, GME pulled back to $190 and is looking quite strong in pre-market trading. It traded around $18 as recently as Jan. 8.
The initial drop came as retail trading apps like Robinhood shutdown GME trading, citing volatility. The company has attracted widespread criticism for the move:
FUCK YOU https://t.co/MVEu7EfdFm
— Dave Portnoy (@stoolpresidente) January 28, 2021
Doge’s own pump also preceded a dump. However, both assets now appear to be rebounding. At the time of writing, doge was trading around $0.054 and GME in pre-market at around $350.
What’s Behind the Pumps?
The WallStreetBets short squeeze appears to be the product of leaked information from hedge funds like Melvin Capital. Sub-Reddit members and other commentators claimed it was morally wrong for high net worth traders to short the stock of a struggling company in the middle of a global pandemic.
What kind of soulless human being do you have to be to short brick and mortar businesses during a pandemic? When these companies are not even allowed to legally operate. These suits have no solidarity, they care nothing about America. I’m glad Wall Street Bets is punching back.
— Tyler Winklevoss (@tyler) January 28, 2021
Redditors responded by coordinating GME buying, leaving many hedge funds heavily out of pocket. As reported in The Guardian, members of the sub-Reddit were less than sympathetic.
Pledging to continue buying up the stock, one commented directly to Melvin Capital:
“You’re a firm who makes money off of exploiting a company and manipulating markets and media to your advantage.”
Although similar in outcome, the doge pump appears less politically motivated than that of GME. The action was not reactive to Wall Street plays, and several posts are largely focused on price (and meme potential).
That said, members of SatoshiStreetBets continue to encourage doge buying. Whether the mem crypto can continue its crazy rise remains to be seen.