The Dogecoin craze has spread to cryptocurrency exchanges in India.
The cryptocurrency, named after a meme of the Japanese dog breed Shiba Inu and backed by Elon Musk of Tesla, has risen over 10X in the last three months, with a market cap of nearly $80 billion on Thursday.
Dogecoin is currently experiencing record-breaking trading rates on Indian cryptocurrency exchanges, resulting in a huge increase in traffic on these sites.
Binance-owned WazirX’s Doge/INR trading system slowed on Wednesday as the network experienced record traffic that it couldn’t handle.
As users complained of unexecuted Doge trades, the hashtag #WazirXScam began to trend on Twitter.
Dogecoin volumes increased by 200% month over month, according to CoinSwitch Kuber, which is backed by Sequoia Capital and Tiger Global. Dogecoin volumes increased by 1300% in the last two weeks alone.
Volumes and prices of Dogecoin are also reaching new highs around the world ahead of Musk’s much-anticipated appearance on an American TV show on May 8.
During his appearance on Saturday Night Live, Elon Musk hinted at addressing Dogecoin, prompting retail investors to invest in the cryptocurrency.
WazirX’s active traders increased by 123 percent in April, and other platforms such as CoinDCX have seen consistent growth.
The platform is being re-architected, according to Nischal Shetty, founder of WazirX, to deal with the anticipated surge on May 8, which could double or triple from Wednesday’s height.
In the last 24 hours, Shetty estimates that Dogecoins worth Rs 600 crore have been traded on the site. In the last two weeks, Kuber’s average daily volumes on Coinswitch have been about Rs 100 crore.
Despite investor interest, most Indian crypto exchanges have listed the token, though some, such as ZebPay, have stayed away.
“We can mention it, but first I’d like to make sure it isn’t just the Tulip Mania of the twenty-first century,” said Vikram Rangala, COO of ZebPay, referring to one of the most well-known market bubbles and crashes in history, which occurred in the 1600s.
Doge’s usage cases have been restricted to tipping on Twitter and Reddit for quality content, unlike other cryptocurrencies that are either in limited circulation – making them a storehouse of value – or have use cases including smart contracts.
The currency is described on its official website as “an open-source peer-to-peer digital currency, preferred by Shiba Inus worldwide.”
According to Coinmarketcap.com, there are over 129 billion Doge tokens in circulation, with more able to be mined.
The lack of regulations in crypto, according to Nithin Kamath, CEO of online brokerage firm Zerodha, makes the industry vulnerable to manipulation, while tight regulations in capital markets make it easier to monitor trading activities that artificially inflate the price of a stock.
“I don’t really understand what’s going on with Dogecoin,” Kamath said. “With no checks in place, there is a high chance that some of the currencies, such as Dogecoin, could be used in a pump and dump scheme. “I believe the safest way to play it is to allocate no more than 1% – 5% of your liquid net worth to assets with a high level of speculative activity,” Kamath said.
According to Mathew Chacko, partner at Spice Route Legal, the safest way to protect investors from a volatile asset class like Doge is to limit trading to high-net-worth individuals and blockchain experts.
In India, the bulk of crypto traders are under the age of 25.
Users of Dogecoin
Users claim that if a large number of people assign value to a cryptocurrency, the token ultimately becomes valuable in that culture, and use cases emerge.
“No matter what happens, I’m not going to sell my Dogecoins,” said Siddharth Ishwar, a 42-year-old engineer who began investing in cryptocurrency this year. “I’m not going to sell it even though it goes to 100.” These currencies may have a bright future ahead of them. When Bitcoin first started, it had no value.”
Dogecoin is an initiation token into the crypto universe for new users like Ishwar and Amrit, who have minimal capital to invest.
Many new traders are flocking to Dogecoin, despite their lack of understanding of blockchain technology, due to the fear of losing out and the thrill of owning a meme stock, as well as the strong influence of Tesla’s Musk.
Riyanshu Singh, a 19-year-old B Tech student from Kanpur, plans to use his Dogecoin earnings to invest in more stable coins like Ethereum and Bitcoin in the future.
Dogecoin, according to long-term supporters of crypto’s future and blockchain technology, diverts attention away from the true importance of crypto by emphasising fast profits.
Comparisons from GameStop
In its nearly eight years of life, Dogecoin has experienced highs and lows, depending on external factors such as a group of Dogecoin Redditors helping Sochi Olympics players in 2014 who were short on funds, to prominent people embracing and promoting the token.
Musk reached a new high in January when he tweeted a spoof “Dogue” magazine cover. The Reddit forum responsible for GameStop’s stock price increase, WallStreetBets, saw a boom in cryptocurrency discussion.
Several industry analysts have drawn comparisons between the latest rise in Doge’s prices and the recent GameStop short squeeze.
“I believe Dogecoin, like GameStop, is one of those markers of social movements that is breaking age-old conceptions of what defines money,” Tanvi Ratna, CEO of Policy 4.0, said. “What seem to be frivolous games are attracting large sums of real money and questioning ideas about the legitimacy of money that is often issued by the government. Most governments are concerned about this dynamic.”
The now-famous GameStop short squeeze pushed the video game retailer’s stock to nearly $160 on Wednesday, up more than 30 times year-to-date.
S&P Global Ratings also upgraded the stock’s credit rating from B- to B on Wednesday.
“While there are numerous risks associated with investing in Dogecoin, the system does not provide legally viable recourse,” said Anu Monga, a partner at AnantLaw and a technology regulatory expert. “Due to Dogecoin’s uncertainty, the UK’s financial regulator has explicitly stated that everyone investing in crypto assets such as Dogecoin does so at their own risk.”
There is currently no regulatory mechanism in place in India to resolve private cryptocurrencies.
The government is considering the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which calls for the RBI to issue an official digital currency.