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Dogecoin price crashes as 'Dogeday' hype fades

·3-min read
KATWIJK, NETHERLANDS - JANUARY 29: In this photo illustration, visual representations of digital cryptocurrencies, Dogecoin and Bitcoin are arranged on January 29, 2021 in Katwijk, Netherlands.  (Photo by Yuriko Nakao/Getty Images)
On 20 April, dogecoin fans celebrated 'dogeday'. Photo: Getty Images

Dogecoin's price plunged on Wednesday, a day after fans tried to push it to $1 as they celebrated 'Dogeday'.

Dogecoin (DOGE-USD) was down 22% to $0.3248 (£0.23) on Wednesday morning in London. The joke cryptocurrency remained down 15% at $0.30 by the end of the working day in Europe.

On Tuesday, it had hit $0.4252 and its market capitalization crossed $50bn as supporters tried to push the price to between $0.69 to $1.

The surge coincided with a flurry of social media attention around what fans of the cryptocurrency called 'dogeday' — a day of celebration dedicated to the meme cryptocurrency that coincided with the unofficial marijuana holiday 420.

READ MORE: What is Dogeday 4/20?, a retail trading platform, said on Tuesday dogecoin has been its most popular cryptocurrency since 14 April. Other platforms have reported similar spikes in interest.

Eric Schiffer, chief of private equity firm The Patriarch Organization, told Yahoo Finance: “There was anxiety with larger investors who had big positions that the dog had its day coming and wanted to exit. Keep in mind there is zero intrinsic value - the current valuation even at the pullback is still totally insane,"

Dogecoin's price took a hit on Wednesday morning. Chart: Yahoo Finance UK
Dogecoin's price took a hit on Wednesday morning. Chart: Yahoo Finance UK

Sebastien Galy, a strategist at Nordea, said: "Beanie baby fervor has reached the crypto space with Dogecoins."

Experts have urged caution when it comes to dogecoin, which was originally created as a joke.

"Investors should be extremely cautious about getting caught up in this herd mentality because dogecoin is very much a speculative bet whose valuation has no reliable basis," said Susanna Streeter, senior investment and markets analyst at stockbroker Hargreaves Lansdown.

READ MORE: The history of dogecoin, the joke currency that's worth more than Barclays and Lloyds

"Demand has come from traders trying to ‘game’ the system and others hoping to benefit from future price rises rather than use the coins as a means of exchange.

"Predicting the point at which demand subsides and prices begin to fall is very difficult, if not impossible and people risk getting their fingers seriously burnt."

Elsewhere on Wednesday, bitcoin (BTC-USD) ticked higher and ethereum rallied. Bitcoin was up 1.4% to trade at $55,638.3. Ethereum (ETH-USD), the second largest cryptocurrency, was up 12% to trade at $2,434.

Both cryptocurrencies have come under selling pressure in the wake of Coinbase's (COIN) hotly anticipated IPO last week but they pared some losses. Both continue to attract attention from mainstream companies.

Venmo, owned by PayPal (PYPL), this week announced that its 70 million customers could buy bitcoin, ethereum, litecoin and bitcoin cash for as little as $1.

Venmo joins a host of companies that have started to recognise or accept cryptocurrencies, including Mastercard (MA) and Tesla (TSLA).

WATCH: What are the risks of investing in cryptocurrency?