Why Dogecoin, Shiba Inu, and THORChain Are Rising Today

Meme tokens and other cryptocurrencies zoomed higher today as economic conditions became more favorable and on some token-specific news. The price of the meme tokens Dogecoin (DOGE 7.33%) and Shiba Inu (SHIB 18.38%) traded more than 5% higher and nearly 10.5% higher, respectively, around 1 p.m. Meanwhile, the price of crosschain cryptocurrency THORChain (RUNE 3.92%) was up roughly 10%.

Renewed interest

Cryptocurrencies seem to have benefited from renewed interest following the Federal Reserve’s half-point rate cut last week, setting the stage for a “risk-on” environment and potentially a weaker U.S. dollar. Cryptocurrencies, viewed as alternative currencies, tend to perform well when the dollar is on the decline. Today, the price of Bitcoin, the world’s largest cryptocurrency, surpassed $65,000 for the first time in roughly two months, as investors get more bullish on the soft-landing scenario. Most of the market also seems to be benefiting from new stimulus measures announced by officials in China this week.

Interestingly, economic data such as initial jobless claims and second-quarter gross domestic product data came in better than expected today, which sent Treasury yields higher.

But a new report out from BlackRock today is saying that some investors have started to think of Bitcoin as a “flight to safety” because of its separation from geopolitical events and currency risk. That’s good news for crypto investors.

Also, the massive payments platform PayPal announced yesterday that U.S. merchants on its platform can now purchase and sell crypto from their accounts, boosting optimism. The company said in a press release that there has been a lot of interest from businesses to have cryptocurrency capabilities. PayPal also said it will allow businesses on the platform to send and receive certain cryptocurrencies to and from eligible third-party wallets. Considering that Paypal and Venmo customers already have these capabilities in their digital wallets, this could lead to more utility of crypto on one of the largest payment platforms in the world.

In more token-specific news, Shiba Inu appears to be rising thanks to an increase in the network’s burn rate, which has recently been able to burn millions of tokens in sole transactions. There is a massive amount of Shiba tokens in circulation, so being able to reduce the amount would lead to better supply and-demand dynamics.

Altcoins benefit

I think the main thing driving these altcoins higher today is Bitcoin’s ascent. As the largest and original cryptocurrency, Bitcoin serves as a proxy for the sector. Altcoins tend to be more volatile than Bitcoin, which is why they can experience larger movements.

THORChain’s ability to allow users to exchange tokens and assets across different blockchain networks does present interesting applicability. But ultimately, I am not interested in any of the altcoins or meme tokens at this time. They are far too volatile and it’s often difficult to understand a true investment case. Speculation seems to be the primary driver of meme tokens like Dogecoin and Shiba Inu. I prefer to invest in some of the more liquid, mainstream tokens like Bitcoin.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and PayPal. The Motley Fool recommends Thorchain and recommends the following options: short September 2024 $62.50 calls on PayPal. The Motley Fool has a disclosure policy.