Reddit users’ targeting of Dogecoin, a cryptocurrency named after an internet meme, appears to share little of the logic behind the GameStop buying frenzy, where an army of DIY investors sought punishment for hedge funds “shorting” or betting against the stock.
Will, a finance professional and active member of the WallStreetBets forum who wished to remain anonymous, said Dogecoin’s joke status was behind its appeal to Reddit users.
“Dogecoin was made as an antidote to the very serious Bitcoin. New coins can be created which reduces its value in theory, unlike Bitcoin where supply is fixed, and they cost next to nothing compared with Bitcoin’s high price per coin, so it is not a very serious cryptocurrency. It is linked to an internet dog joke,” he said.
He said jokes were central to the Reddit subculture and helped explain why members of the community had congregated around certain stocks.
“Having high conviction in one trade accompanied with a ‘you only live once’, or Yolo, attitude and then wearing the gains or losses as a badge of honour online is the part of the reason why seemingly random shares surged last week,” he said.
“The GameStop and Dogecoin story is about taking control of finances and having fun with it. The line is blurred between games and real life.”
Will said “meme” investing was here to stay and investors needed to understand its importance if they wanted to make money from momentum stocks.
“If you see patterns early, you can make money. Joke stocks or cryptocurrencies doesn’t mean serious investors should not follow them. I check WallStreetBets every morning,” he said.