Dogecoin is trading at about 42 cents Wednesday morning, that’s up 25% for the day, according to Coin Metrics. The move gave it a $54 billion market cap, making it the sixth-largest cryptocurrency by market value, according to Coinbase.
The cryptocurrency is based on the 2013 Internet meme doge and was created in jest in the same year, when bitcoin’s enthusiastic but niche community began to strengthen around its pseudonymous creator, Satoshi Nakamoto.
It’s gained some relevance this year, however, following the endorsement and continuous hype on social media by Tesla CEO Elon Musk, who has become something of a cryptocurrency market mover with his tweets about dogecoin as well as bitcoin. In early May, Musk’s posts fueled the dogecoin’s rally to its all time high of 67 cents, per Coin Metrics. His appearance on SNL, in which he called dogecoin “a hustle,” just as easily sent the price crashing back down.
Trading on Coinbase Pro will begin Thursday at 12 p.m. ET.
Coinbase Pro is the exchange’s professional-level trading platform for active traders. Coinbase doesn’t currently support dogecoin on its retail trading platform. The speculative joke coin historically has held little promise as a useful blockchain project and had few technological updates, making it especially risky for amateur retail investors – who have been the biggest drivers of different cryptocurrencies’ price rallies, including that of dogecoin.
Coinbase is the largest US cryptocurrency exchange, with 56 million verified users and $223 billion in assets across its platform. Historically, when it lists a new asset, its price tends to jump on the first day trading day (like an IPO pop). This is a well known phenomenon referred to as The Coinbase Effect. Pre-listing announcements alone have had a similar effect on asset prices.
The listing process is likely to be thorough and rigorous, especially now that Coinbase is a public company. Its decision to list dogecoin could be seen as a litmus test for other individual assets, particularly as newcomers to cryptocurrency and different metrics – like tweets by big business figures – have emerged.
“What we’re seeing with social media is the ability of a small piece of the overall mosaic move markets,” former SEC chairman Jay Clayton told CNBC’s “Squawk Box” on Wednesday, when asked about Musk’s tweets.
“As just a person who looks at markets that does concern me,” he said. “What makes up a good investment is never just that one piece of the mosaic. Taking one of those pieces and amplifying it without updating the rest of the picture –that’s not something that should be encouraged.”