If investors needed any more proof that animal spirits have come back to digital assets, look no further than the dog-themed memecoins,
Dogecoin
and
Shiba Inu,
which have pulled ahead to lead the latest leg of the crypto rally.
Tokens are on a roll, with the biggest crypto soaring amid hopes that U.S. regulators will soon approve the first spot Bitcoin exchange-traded fund, with expectations that interest rates will fall significantly in 2024 also buoying prices. But it hasn’t just been Bitcoin benefiting of late, with smaller tokens, or altcoins, beginning to outpace their bigger brother in a sign that optimism may be spreading.
Memecoins are a shining example. Dogecoin and Shiba Inu, called such because they were initially launched as references to internet jokes as opposed to serious blockchain projects, represent the frothiest parts of the crypto market. Dogecoin is a reference to an internet joke involving a Shiba Inu dog called “doge,” with the Shiba Inu token being a further iteration of that meme, playing on Dogecoin.
These tokens have outperformed
Bitcoin
over the past couple of weeks. While the largest digital asset has gained 22% since Nov. 21, Dogecoin prices are up 40% over that period with Shiba Inu gaining 34%. Over the past 24 hours alone, Dogecoin and Shiba Inu have jumped 14% each, beating Bitcoin which has climbed 5%.
Bullish sentiment spreading to altcoins, and especially the meme-ier names, is a sign the crypto rally is broadening, a trend that should boost the likes of
Coinbase Global,
which counts on altcoin trading for a significant proportion of its brokerage business.
For now, the acceleration in memecoins is a positive sign for cryptos at large. But if it wanes, it could be a sell signal: When crypto markets get too frothy, with even more outsize gains for the smaller coins, it can be a sign that a correction is due.
Write to Jack Denton at jack.denton@barrons.com
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