With a $78 Billion Market Cap, Dogecoin Needs to Be Taken a Little More Seriously

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Dogecoin soared above 69 cents on Wednesday—not bad, after starting the year at less than a penny. It fell back a bit, but it’s now worth some $81 billion. Launched as a joke in 2013, Dogecoin, unlike Bitcoin, has no supply cap, so it’s no inflation hedge. And while a few online retailers accept Dogecoin, it lacks Bitcoin’s mainstream appeal.

What Dogecoin has is a big community—probably in the millions. Trading it has triggered outages on platforms like Robinhood. Its community rallies around observances like Doge Day, on April 20 (a holiday for pot fans, too), and some attribute gains to Elon Musk going on Saturday Night Live. “The social aspect of crypto is meaningful,” writes Matt Hougan, chief investment officer of Bitwise Asset Management, in an email to Barron’s. “[It’s] the first money native to the internet, and it’s not surprising that some of the common features of the internet are part of its story, including online communities, viral growth, etc.”

Online communities can form the basis of new markets. Investors who came of age before the internet may view online “assets” as worthless. Those who grew up spending real money to buy a videogame sword are more comfortable with it.

But even Hougan sees Dogecoin as an example of market excess. Bitwise has an index that tracks the 10 most valuable cryptocurrencies by market cap. Dogecoin ranks fourth, but it isn’t in the index. Bitwise has rules that screen out assets that aren’t appropriate for institutional investors, he says, and Dogecoin fails to meet a number of them. Musk may be ready for late-night, but Dogecoin isn’t quite ready for prime time.

Last Week

Temperature Rising

Stocks rose despite weaker-than-expected manufacturing data, then fell as tech sank on comments by Treasury Secretary Janet Yellen that rising rates might cool off an overheating economy, which she walked back. The Dow industrials set its 22nd and 23rd records of 2021. Jobless claims fell to a pandemic low, but new job creation proved anemic. On the week, the Dow rose 2.66%, to 34,777.43; the S&P 500 was up 1.23%, to 4232.60; and the Nasdaq fell 1.51%, to 13752.24.

Still Banned From

Facebook

Facebook’s 20-person oversight board upheld the banning of former President Trump after the Capitol insurrection in January, but gave the company six months to make a final decision and explain its reasoning.

Fortnite at the App Store

Apple

versus Fortnite-maker Epic Games went to court. The case focuses on Apple’s iPhone App Store, which Epic charges is monopolistic. Apple tossed Epic from the store after the videogame developer sought to get around Apple’s fees. The case hinges on how a market is defined in the digital world. The European Commission had warned Apple the week before about abusing its App Store dominance in music streaming, following a complaint from

Spotify Technology.

Vaccines: Use or Lose

President Biden’s top trade adviser proposed temporarily loosening patents on U.S. Covid-19 vaccines to ease production globally. Meanwhile, vaccinations are slowing, even as regions such as New York open up. The federal government told states it would reallocate vaccine from states with low demand to high-demand areas. Meanwhile, in India, a backlash against the handling of the pandemic resulted in Prime Minister Narendra Modi’s BJP Party being drubbed in West Bengal state elections.

David Swensen, 1954-2021

Yale University investment chief David Swensen died at 67. Swensen took over at Yale at 31, and pioneered the use of alternative investments—private equity, venture capital, and hedge funds—in endowments, an influential strategy until stocks surged in the past decade. Over the years, he seeded the industry with his disciples. In a note to staff, Harvard investment manager N.P. Narvekar called him “the father of the modern ‘Endowment Model’ of portfolio management.” And Steven Galbraith, a former Morgan Stanley CIO, now managing member at Kindred Capital, said: “He was to endowments what Jack Bogle was to funds—none better as a person or professional.”

Annals of Deal Making

Dell Technologies agreed to sell its cloud unit, Boomi, to private equity’s Francisco Partners and TPG for $4 billion…

Apollo Global Management

sealed a deal for Verizon Communications’ Yahoo! and other digital-media assets for $5 billion…CVC Capital Partners invested $250 million in cybersecurity firm Acronis, giving it a $2.5 billon valuation…Galaxy Digital said it would buy BitGo for $1.2 billion in cash and stock.

Write to Avi Salzman at avi.salzman@barrons.com