The price of the meme token Dogecoin (DOGE -2.51%) fell roughly 4.5% between 4 p.m. ET Wednesday and 10:58 a.m. ET on Thursday for no obvious reason, although I do think there are a few possibilities that might explain the move.
Earlier this week, the price of Dogecoin shot up after a Shiba Inu icon replaced the bluebird that is normally seen on the top left of Twitter’s home feed.
This was considered by many to be significant because Twitter’s CEO Elon Musk is a well-known Dogecoin supporter, and it’s supposedly one of three cryptocurrencies that Musk owns. Plenty of comments by him about Dogecoin in the past have sent the price of the token soaring.
Many have wondered whether Musk might integrate some kind of crypto component into the Twitter platform that would also include Dogecoin. But apparently, he changed the icon to make good on a promise he made to the head of the sub-Reddit page WallStreetBets. So I think part of the sell-off has to do with some of the excitement from this initial push starting to wind down.
Another aspect that could be causing the move today is a pullback in the broader crypto market as investors contemplate where the Federal Reserve might be headed with interest rates. Rising rates have crushed crypto prices over the last year. Yesterday, New Zealand’s central bank raised its benchmark rate by half a percentage point, more than some had expected.
And traders have gotten a little bit more subdued and are not betting on a rate cut from the Fed as early as they had a few weeks ago. But tomorrow’s jobs report and then the Consumer Price Index reading for March will be big data points for the Fed and could potentially influence what the agency does next.
Dogecoin seems to be taking a breather today after a big run earlier this week and as investors await key inflation data. Either way, I continue to have no interest in the token because I do not believe it offers any special differentiation from other cryptocurrencies.