In this photo illustration, the Elon Musk’s twitter account seen displayed on a mobile phone screen with a Dogecoin logo in the background.
Adrees Abbas | Lightrocket | Getty Images
Memecoins surged early Wednesday on the back of election results that showed former President Donald Trump in a strong position to gain a second term.
Dogecoin surged more than 22% and Shiba Inu gained 8%, according to Coin Metrics. The moves came as bitcoin rose to a fresh record of $75,000 even.
“With the crypto markets experiencing low volatility in the lead up to the election as the industry looks to gain clarity on future regulatory conditions, traders are bracing for volatility once results start to come out,” said Chris Chung, CEO at Titan, a decentralized exchange aggregator built on the Solana blockchain. “Certain sectors that have buoyed prices, such as the renewed interest in memecoins, may experience major price movements as individual states report election results.”
In the lead-up to Election Day, memecoins and AI-related crypto tokens outperformed the overall crypto market. The sector of the crypto market is used as a measure of retail investors’ risk appetite.
A ramp-up of memecoin activity is a sign that retail investors are participating and have appetite to speculate much further down the risk curve, Ryan Rasmussen, head of research at Bitwise Asset Management, told CNBC.
“Given that memecoins have low market caps and liquidity, I’m not surprised to see them skyrocketing alongside the broader crypto rally,” he said. “If crypto sells off, I’d expect the same outsized move in memecoins to the downside.”
“I’d urge long-term investors to not place too much emphasis on memecoin activity,” he said. “In the long term, there will be very few winners in the memecoin market, and with thousands of coins launching daily, picking a specific memecoin is akin to buying a lotto ticket.”
The crypto market seemed to be positioning for a Trump victory Wednesday as investors monitored the results of the U.S. presidential election. The former president is seen as the more favorable candidate for the broader crypto market beyond bitcoin as he has promised a more cypto-friendly Securities and Exchange Commission if elected for another term.
“Trump has largely been seen as extremely positive for the cryptocurrency markets, and any indication of a possible victory will likely push prices up extremely quickly in anticipation of a flood of capital being deployed,” Chung said.
“Dogecoin specifically could also be rallying on “the very real prospects that Elon Musk [a long-time Dogecoin proponent] could be appointed to head the Department of Government Efficiency in a Trump admin,” said Nic Puckrin, co-founder and CEO at crypto education platform Coin Bureau.
That refers to remarks made by Trump in September, when he said he would appoint the Tesla CEO to a “government efficiency commission.” Musk, who has called himself the “Dogefather” in the past and has been known to make public comments about the memecoin that influence its price, has since on his social media platform X referred to the commission as the “Department of Government Efficiency,” or “D.O.G.E.”