Why Meme Coins Dogecoin and Shiba Inu Were Surging on Saturday

What happened

The cryptocurrency surge of the last few days extended into the weekend, with many top coins and tokens continuing their rise on Saturday. The two highest-capitalized meme cryptos, Dogecoin (CRYPTO: DOGE) and Shiba Inu (CRYPTO: SHIB), are both coming along for the ride. As of Saturday night, Dogecoin had risen by nearly 9% over the preceding 24 hours, while Shiba Inu was advancing by 7%.

So what

As we’ve seen many times with such rallies, a rising crypto tide lifts most boats. Recent indications that inflation continues to fall have led to speculation that the Federal Reserve will slow or halt its interest rate increases. That’s helping to support the prices of growth assets and speculative investments.

Cryptocurrencies generally fall into that second category, and meme coins — as they have little practical value for much of anything — are particularly speculative. So the ever-volatile Dogecoin and Shiba Inu are hopping right along with the bouncy market.

Compounding this, the opening weeks of 2023 have seen intensifying interest in meme coins and tokens.

Largely, that’s down to the recent airdrop of a new token on the scene, Bonk, which sits on the Solana blockchain. Bonk drew much immediate interest, not least because its developers released 50 trillion of the tokens — 50% of its total supply — in a recent drop. That wild volume instantly made it a big player on the meme coin scene, garnering it much attention.

Now what

Since they have little practical utility, nearly all the action around meme coins involves hype and speculation. The emergence of Bonk makes these market segments lively and interesting, but investors need to bear in mind there isn’t much underpinning the value of these assets. Buyer, as always, please beware.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Solana. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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