The Wall Street Journal reports on a strange corner of the current market frenzy:
Dogecoin, a speculative coin backed by nothing, shot up after Trump revealed plans to create a government-efficiency department called DOGE, to be co-led by Elon Musk, a dogecoin evangelist. Its $55 billion market cap now tops that of Ford Motor.
Not quite. The part about dogecoin being explicitly based on nothing is true. But the part about it shooting up in price after Trump announced DOGE isn't:
Dogecoin more than doubled after the election, shooting up from 16¢ to 38¢ by November 12. That evening Trump announced DOGE. The next day dogecoin rose by 2¢ and then immediately gave it back the day after.
So what's the real deal with dogecoin? As usual with this idiocy, I suppose we'll never know.
If this is the same Doge as when it started, it's literally a joke.
Because the people in the doge community were talking up this announcement long before it happened.
That's it.
As if a twice impeached, many times indicted felon winning the presidency isn't puzzling enough.
All crypto started going on a tear on November 6.
Also, DOGE's patron saint, Mr. Muskrat, is doing his edgelord shitposting pseudo-officially now.
They're meme stocks. Meme stocks get pumped, and then crater, rinse and repeat. How is this not obvious about crypto yet?
" . . . a Company for carrying on an undertaking of Great Advantage but no one to know what it is."
I had to look up this reference, and boy, it is spot-on. Thanks for the educational experience!
Back to the classics! Good old South Sea Company.
MEOOOOOW...with the NUTS running the country not surprised. ALL OF THE CONVICTED FELON WHORE MONGER PEOPLE will carry out FELON's orders. I feel sorry for this country. Kitties know
Matt Levine at Bloomberg is worth reading on the topic. Skeptical, but open to different interpretations.
Of course, yes, dogecoin looks entirely like a scam. Meme stocks look worthless. But GameStop didn't go back to zero and it's now worth $11 billion. And there's always the Bitcoin story...
At some point, though, a company has make enough profit to make it worth owning the stock. If it doesn't, there comes a point at which the stock price rationalizes and we get to see which investors are holding the bag. As they say, the market can stay irrational longer than you can stay solvent, but eventually, it will become rational.
GameStop has a market cap of $11.86 billion, but it has annual revenue of $798 million, giving it a price/revenue ratio of 14.86. Its price to earnings ratio is over 200. Its price/book ratio is 2.6. Unless a company has enormous growth potential, which GameStop most certainly does not, these valuations are wildly irrational, and will eventually come to an end.
Sure, it's not as dumb to think GME has value as it is to think DJT has value, but it's still dumb.
It's tulips all the way down. But now with the government covering any losses. What could go wrong?
The government under Biden has started cracking down on bitcoin since its main use cases are criminal money transfer and financial scamming. Trump has promised to defund the police and encourage criminal money transfer and financial scamming. Now that he's president-elect, criminals and financial scammers see an increased demand for bitcoin and higher bitcoin profits. I can't imagine why anyone is surprised.
Insider speculation seems like the most likely explanation.
WSJ: "...Dogecoin ... shot up after Trump revealed plans to create a government-efficiency department called DOGE, to be co-led by Elon Musk ..."
There is no reason serious journalists should be describing DOGE as a "department." A department is an executive-branch organization performing ongoing administration work for various government functions. The head of each department is a member of the president's cabinet (e.g., Justice, Transportation, Interior, Treasury). There are currently 15 departments.
The Department of Government Efficiency is not a "department." It is a proposed presidential advisory commission. It will operate until July 4, 2026, then cease.
The stated purpose of the new commission is to make government operations more efficient, which is also the work of the legislative branch agency called the Government Accountability Office (GAO). What's different about the two is that the actual purpose of DOGE is to implement radical right-wing changes to the federal government and make Elon Musk and his buddies rich.
It's almost like a self-perpetuating speculative scam at this point. It goes up because people believe it will go up and put money into it, and when it collapses they later on start putting money into it again because they think it will go up. Almost like gambling with unpredictable odds.