By Lisa Pauline Mattkal and Medha Singh
(Reuters) โ Is Dogecoin over? "Memecoins," a hyper-speculative, hyper-volatile and somewhat bizarre class of cryptocurrency, are all the rage after the latest digital token posted sky-high market gains.
Pepe, a coin inspired by the anthropomorphic frog popular in internet memes, jumped nearly 7,000% in the 17 days after its launch on April 16, reaching a market capitalization of $1.8 billion on May 5, according to the tracker of CoinGecko data.
Pepe's boom has renewed investor interest in Memecoin, with total trading volume rising to $2.6 billion in the first week of May, up from $408,000 the week before, according to data from Dune Analytics. .
โMemocoin tends to go up from time to time, and this has historically happened when the market is slightly volatile or sideways,โ said Todd Groth, head of indices research at CoinDesk Indices. "It's almost like the market isn't moving fast enough and traders are finding these smaller coins to trade."
In fact, the latest memecoin craze occurs when the bitcoin rally comes to a halt in 2023. The number 1 cryptocurrency has lost 6% since mid-April to $27,416.
Pepe, which trades in fractions of a percent, is down 60% from its May 5 high, though it still has a market capitalization of about $740 million.
Its market value makes it the third largest after Dogecoin and Shiba Inu, both of which originated as internet jokes in reference to a Japanese dog breed, with capitalizations of over $10 billion and $5 billion, respectively.
Reuters could not immediately identify Pepe's creators and his Twitter account did not respond to a request for comment.
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Memecoins first appeared during the 2021 "Wall Street Bets" movement, driven by retail operators. They lack practical use beyond speculation, which sets them apart from more "conventional" currencies like bitcoin and ether, which proponents say have potential as a means of payment or a store of value.
Market players warn that Memecoin could lead to losses for traders and investors.
โHumans love to speculate,โ said Martin Leinweber, commodity strategist at MarketVector Indices. โI would be very cautious when buying them. They are pure bets โ.
Pepe's website says it was released "to the public" without any "formal team or roadmap" and is "completely useless and for entertainment purposes only."
According to data firm Messari, the coin is the fastest growing cryptocurrency hosted on Ethereum, the second largest blockchain.
(Reporting by Medha Singh and Lisa Pauline Matcal in Bengaluru; Spanish editing by Javier Lรณpez de Lleida)
