‘Perception of Validity’: How the Market Is Reacting to Dogecoin on Coinbase Pro

Retail traders have been howling ever since Tuesday’s blog post by Coinbase saying traders on its Pro platform can begin trading dogecoin as early as Thursday, depending on “liquidity” conditions.

Dogecoin was trading at 41 cents at the time of writing, representing a 32% gain in the last 24 hours. 

So what does the listing mean for the meme cryptocurrency? We asked several analysts, fund managers and competing exchanges for their take on how the markets will receive a new market letting customers have a bite of dogecoin.  

“People are still going to be cautious long term, but this debut will eventually have some ability to attract traditional investors and not just the Robinhood/Reddit army,”  said Edward Moya, senior market analyst at Oanda. 

“There’s certainly momentum behind this move,” said Moya. 

After Elon Musk’s appearance on "Saturday Night Live," the meme cryptocurrency’s momentum slowed and went quiet. People were moving on to ether, safemoon and other altcoins, according to Moya. 

Now, what was once seen as an “embarrassing trend” for technical traders could now be breaking above this, he said.

Kraken, the cryptocurrency exchange, said it processed more than $6.5 billion worth of DOGE in April, and in May over $9 billion. 

Although the meme cryptocurrency has gained support from Tesla CEO Elon Musk and billionaire entrepreneur Mark Cuban, for the cryptocurrency to take off it needs a use case argument according to Moya. 

“There’s got to be some kind of innovation,” he said. 

Voyager, a U.S. crypto trading app that supports retail trading for dogecoin, has seen “significant appreciation and trading activity,” for the cryptocurrency on its platform today.

“We’ve had consistent net buyers on dogecoin which indicates the general bullishness around it as it gains popularity across all demographics,” said Voyager’s CEO Steve Ehrlich in an interview with CoinDesk. 

Coinbase wrote in its blog post about the listing that unlike bitcoin, "which is designed to be scarce, dogecoin is intentionally abundant — 10,000 new coins are mined every minute and there is no maximum supply." 

James Butterfill, investment Strategist at CoinShares, said that when speaking to his clients, who are institutional investors, they are wary of investing in dogecoin due to its lack of fundamentals. 

“When you invest in any digital asset, you have to look at the fundamentals behind it, with dogecoin there’s a lack of these,” he said. 

From a technical perspective, Katie Stockton, founder and managing partner of Fairlead Strategies, said she sees this move creating a “perception of validity.” 

“What we are seeing right now is a short-term oversold bounce,” she said.

Stockton said dogecoin has gained short-term momentum, but sees limits to further upside.