(Bloomberg) — At a conference in Manhattan last week, a few hundred people gathered to hear luminaries of the cryptocurrency industry and executives from the likes of BlackRock and Fidelity discuss Bitcoin’s march into the investing mainstream this year.
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However, it was another token that kept coming up in the conversations: a newer cryptocurrency best known for its logo featuring an image of a dog wearing a knit hat. The billionaire Michael Novogratz, chief executive officer of Galaxy Digital, jokingly lamented that he doesn’t have a position in the coin called dogwifhat.
“I don’t, as much as I want to,” he said to laughs from the audience. “I just fear if I tweet ‘God, I love dogwifhat like Arthur Hayes does,’ I will literally be investigated two days later by the CFTC.”
The proximate cause of this year’s revival in digital-asset markets is the arrival of long-awaited US exchange-traded funds that are delivering Bitcoin into investors’ traditional brokerage accounts. Yet much like with the conversations at this Bitcoin Investor Day conference, the crypto community’s more whimsical impulses are stealing the spotlight in the market, pushing some of the most-pointless tokens — known as memecoins — to even bigger gains than Bitcoin.
By now, even a normie – the industry’s nickname for non-crypto people – probably knows a thing or two about memecoins, the tokens most-famous for their cute logos featuring dogs or frogs or pop-culture references rather than any hint of blockchain innovation. Still, the silliness currently on display among self-described “degens” in this corner of the crypto market may come as a surprise.
A website called pump.fun allows anyone to create a memecoin through an automated process. Simply enter a name, an introductory description and an image that represents the token. Others browsing the website can “ape” – crypto slang for buying without doing much research – into whatever memecoins they like.
Spending just a few minutes on the website is mesmerizing, with dozens of new memecoins created — and swiftly pumped in value by traders. There are tokens like BoomerCoin. (Ticker: BOOMER; description: “Sell and Grandma dies.”) among memecoins in almost any pop-culture, or crypto-culture category one can imagine. There’s even one mocking a caricature of a risk-adverse traditional-finance worker named Jared, with the description: “memecoins? Sounds too risky, I will never touch them.”
Elsewhere, a new wave of bots based on messaging platform Telegram is fueling popularity for blockchain platforms that are cheaper and faster than Ethereum. Tornado Blast, a Telegram bot on blockchain platform Blast, makes gambling on tokens as easy as chatting with ChatGPT. Anyone with a digital wallet and Telegram can buy, sell, and transfer tokens with Tornado Blast. The bot also has new functions such as “Gem Finder,” which purports to use artificial intelligence to find coins “that could have a nice risk/return ratio for your degens plays,” according to the website.
Yet, while the latest craziness has breathed new life into the crypto world’s promo artists, the retail traders they rely on to “ape” into the coins have been slow to return. Global retail trading activity on Binance in February only returned to levels seen in mid-2022, which was the end of the last bull market.
“There are definitely more retail users returning, but not to the volumes of what we saw in 2021,” Andy Goldin, global head of data and analytics at Binance, the world’s largest crypto exchange, said in an interview. “Some of this memecoins stuff is a little bit more the purview of experienced traders.”
Still, on the Solana blockchain, the memecoin frenzy is picking up steam. More than $122 million worth of Solana tokens were raised from so-called presales of new coins before they were launched, according to data compiled by crypto sleuth ZachXBT.
“The memecoins are so naturally speculative, there’s no expectation that they will make real products,” said Zaheer Ebtikar, founder of crypto fund Split Capital. “It’s just people fighting for liquidity and attention. People, especially retail investors that got blown up from last cycle, are so eager to win it all in one trade.”
Several incidents recently have served as a reminder of how risky the hype can be.
A developer of a sloth-themed memecoin claimed they accidentally burned a large amount of the tokens after the project raised $10 million — essentially losing all the money raised. While this could have become a major legal problem in any traditional market, the token, called Slerf, started trading nevertheless and now has a total market value of $340 million, according to tracker CoinGecko.
“The biggest casino on Earth seems to have re-opened its door,” crypto blog Rekt said in a recent newsletter on the Slerf incident. “The odds are against us, and yet we ape don’t seem to learn. What does this say about us?”
Back at the Bitcoin Investor Day event in Manhattan, it was time for BlackRock’s head of digital assets, Robert Mitchnick, to speak. The firm’s iShares Bitcoin Trust has been at the top of the league table of the new ETFs, gathering more than $17 billion in assets in less than three months. The event’s organizer, the crypto personality Anthony Pompliano, asked Mitchnick what’s next for BlackRock. And also, of course, what he thought of Novogratz’s take on dogwifhat.
“I think that crypto Twitter would love to believe that a dogwifhat ETF is coming next,” Mitchnick said to laughs, before indicating that no one should count on that: “I actually don’t know what dogwifhat even is.”
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