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Out of 411 users surveyed by Binance, nearly half (49.64%) are “very bullish” on Dogecoin. A big reason for this may be recent news of crypto-focused asset managers starting to launch Dogecoin-based investment products.
On Jan. 31, Grayscale Investments announced the launch of the Grayscale Dogecoin Trust, one of the first single-asset crypto investment products focused on the popular memecoin. Other crypto asset managers are planning similar products, as well as single-asset crypto investment products for other popular memecoins, such as TRUMP.
Yet while memecoin-based investment products could be a boon for DOGE and TRUMP prices, it’s not set in stone this will happen. Mostly, because of one key difference that sets memecoins apart from the cryptocurrencies most highly-embraced by institutional and retail investors alike, such as Bitcoin (BTC) and Ethereum (ETH).
The Latest Product from a Crypto Fund Pioneer
As one of the first crypto asset managers, it’s not surprising that Grayscale Investments has become the largest such company in the industry. Across its funds, Grayscale has around $35 billion under management. Yet besides its first-mover status, another factor has likely contributed to its success in the crypto investment products market.
That would be Grayscale’s track record as a crypto fund pioneer. As you may have already known, Grayscale formed one of the first BTC-focused investment vehicles, the Grayscale Bitcoin Trust (GBTC). Grayscale also pioneered ETH-focused investment vehicles, with its Grayscale Ethereum Trust (ETHE).
In more recent years, the asset manager has launched additional products, each one focused on one particular cryptocurrency. Some of Grayscale’s latest offerings have included investment funds for AAVE, Aave’s governance token, as well as funds focused on Lido and Optimism’s governance token.
Now, with the launch of its Dogecoin Trust, Grayscale is once again heading to unchartered waters. It remains to be seen, but by bringing one of the first Dogecoin investment products to market, Grayscale could further cement its reputation as an innovator and as a leader in the crypto asset management space.
What This Means for Dogecoin Prices
Alongside Grayscale’s recently announced plans, other crypto fund managers have revealed plans to launch their own memecoin-focused investment products. A key example is with asset managers REX Shares and Osprey funds.
Last month, these two entities are currently working to obtain Securities and Exchange Commission (SEC) approval, in order to launch single-asset ETFs for DOGE, TRUMP and other memecoins that remain very popular.
Interesting stuff, yet the real burning question here is whether the launch of these funds will lead to renewed bullishness for DOGE. Considering the above-mentioned high level of positive sentiment for Dogecoin, one may be tempted to come to this conclusion. On the other hand, despite assertions that Dogecoin, which operates on its own proof-of-work network, offers some utility, as a tool to promote financial accessibility, there’s a reason DOGE remains classified as a memecoin.
With little-to-no utility compared to BTC and ETH, price action for DOGE hinges highly on the level of speculative hype surrounding it. Hence, it is very questionable whether the launch of Dogecoin-themed investment products will lead too much in the way of capital inflows from institutional investors.
Bottom Line
Yes, anything is possible. Even if institutional investors shun memecoin investment vehicles like the Grayscale Dogecoin Trust, retail investors, familiar with DOGE but not familiar with the ins-and-outs of cryptocurrency trading, could decide to invest in this product.
The resultant inflow of retail capital could in turn spark another near-term rally for DOGE. Even so, it may remain wise to err on the side of caution. Based on the fact, it remains best to assume that the next big breakout for Dogecoin will not be driven by the same sort of catalyst that would drive a new rally for Bitcoin, Ethereum, or any of the other established, high-utility cryptos.
In other words, it may not be until the market decides to experience “memecoin mania” again that DOGE gets out of its current rut, and gets back on an upward trajectory. Predicting the next such wave is a whole lot easier-said-than-done. Chances are that such a conclusion also applies to other popular memecoins as well, such as the above-mentioned TRUMP memecoin.
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