The Dogecoin faithful have declared April 20 “Doge Day,” but on Wall Street, having your own day is no guarantee of legitimacy or longevity.
Still, the cryptocurrency token that started out as a joke deserves some props. Created in 2013 by software engineers as a “fun” alternative to bitcoin (BTC-USD), the dogecoin (DOGE-USD) is based on a “Doge” meme featuring a Shiba Inu dog dog alongside nonsensical phrases in multicolored, Comic Sans-font text. Dogecoin is now a top 10 digital currency worth $50 billion — bigger than Exxon Mobil (XOM) or Ford (F). Fans are hoping to see Dogecoin hit $1 on April 20, one week after it was valued at just 9 cents.
While it’s spectacular and “nonsensical” rise has been something to behold, veteran trader Eddie Ghabour, managing partner at Key Advisors Group, isn’t buying the hype.
“I look at Dogecoin as more of a speculative play that when this bubble bursts, it will probably cease to exist,” Ghabour told Yahoo Finance Live.
That hasn’t stopped the r/WallStreetBets crowd from fueling the Dogecoin feeding frenzy. Even well-known consumer brands are getting in on the act.
Conagra’s Slim Jim (CAG), home of the beef jerky, tweeted out last week ‘RT to send Doge to the moon!!” -the now familiar rallying cry among the Reddit crowd for GameStop’s stock.
Since then, Mars, the parent company of Snickers and Milky Way, have taken to social media to jump on the Dogecoin bandwagon and Tesla CEO Elon Musk has tweeted his support for the meme-based token.
When it comes to cryptocurrencies, Ghabour says ethereum (ETH-USD) and bitcoin are the two that he thinks will survive when the bubble eventually pops.
“I look at crypto the same way I look at the technology bubble that we saw in the ’90s, and then ultimately, that busted in March of 2000. That will happen again. We are absolutely in a bubble,” he said.”That’s why you’re seeing asset prices inflate the way they are. And crypto is the most speculative of all these risk assets.”
For investors suffering from FOMO (fear of missing out) Ghabour believes there’s still plenty of upside opportunity in the coming months for some crypto — just not all.
“As long as we’re in this reflationary trade that we believe is going to stay intact at least for the next quarter, possibly two, bitcoin and ethereum will probably be one of the higher returning asset classes because it is a truly risk-on trade.”
Cryptocurrencies took another step into the mainstream Tuesday when PayPal’s mobile payment app Venmo announced it will now let users buy, hold and sell four different cryptocurrencies — bitcoin, ether, litecoin (LTC-USD) and bitcoin cash — with a minimum spending requirement of $1.
“I do believe that they will continue to be here many, many years down the road and they are going to become more and more of an asset class that institutional managers will continue to add to,” said Ghabour, who bought more bitcoin and ethereum over the weekend, when the coins started to crater by as much as 15%.
“Saturday, fortunately, I was awake when the crash happened, and I added a little bit more for my own personal portfolio,” he said. “Those are the times that you want to be adding to those positions, when they have these big corrections. Many times, it’s a tough thing to do to buy while everything seems to be crashing.”
We’re reminded on a nearly daily basis that trading in crypto is not for the faint of heart. Ghabour warns the volatility can be brutal. “You have to have the right risk tolerance for crypto because these 20%, 30% moves in corrections, it’s very normal,” he said.
In the case of Dogecoin, it shot up 400% in just seven days leading one Reddit user to declare himself a “Dogecoin Millionaire” on the Robinhood investing app, where he showed off a balance of $1,081,441.29 in his account.
Ghabour, however, is still not convinced. “Dogecoins — they’re great to talk about because of the moves they’re having but I don’t look at them as a real asset,” he said.
Alexis Christoforous is an anchor at Yahoo Finance. Follow her on Twitter @AlexisTVNews.