Wealthy investor Mike Novogratz says that the run-up in dogecoin is a reflection of the disenchantment of younger investors in the current state of financial markets and the economy and cautioned that trying to bet on the parody coin at these current levels is dangerous.
“It is dangerous being a speculator [in bitcoin], long or short,” he told MarketWatch. “It is a danger buying here and a danger [betting against dogecoin] here…you could lose a lot of money,” he said.
That said, the chief executive of digital merchant bank Galaxy Digital CA:GLXY said that he didn’t want to discredit investors in dogecoin but felt it is worth pointing out that the asset is “probably trading at 190% of volatility,” Novogratz, chief executive of digital merchant bank Galaxy Digital
GLXY,
+2.10%.
At last check, dogecoin prices
DOGEUSD,
+8.49%
were up 8% at 57.6 cents on CoinDesk and is up nearly 13,000% so far in 2021.
A world in which interest rates are near 0% or below has emboldened investing in the nascent crypto sector and prompted a speculative fervor in digital assets like bitcoin, dogecoin and the stock of videogame retailer GameStop Corp.
GME,
-0.78%,
Novogratz said.
Dogecoin’s parabolic rise is drawing both applause and apprehension as its supporters aim to drive the parody coin to a value near $1, with critics warning that the asset bears all the hallmarks of an asset bubble that is bound to pop and leave carnage in its wake.
Novogratz is particularly worried that novice investors will lose a lot of money but acknowledges that investors are seeing a tremendous amount of wealth created from the rally in the coin created as a lighthearted riff off bitcoin back in 2013.
The Galaxy CEO said that his son’s roommate is going to pay off student loans from dogecoin profits.
Gains in traditional assets have been pedestrian set against dogecoin. Gold futures
GC00,
+0.05%
are down 6% so far this year, the Dow Jones Industrial Average
DJIA,
+0.29%
and the S&P 500 index
SPX,
+0.07%
are up by at least 11% in 2021, while the Nasdaq Composite Index
COMP,
-0.37%
has gained over 6%.
