Imagine a team of smartly dressed bankers pitching an investment to Wall Street financiers only to be left raging when a weirdo in a dog costume walks in and gets the money. That’s how some corners of the cryptocurrency market are reacting to celebrities led by Elon Musk tweeting about dogecoin, a tongue-in-cheek, meme-ified version of bitcoin launched in 2013 with a Shiba Inu as its mascot.

The billionaire’s endorsement last week of doge as “the people’s crypto” — cheered by KISS rocker Gene Simmons and rapper Snoop Dogg — sent trigger-happy Reddit traders stampeding into the canine-themed coin. As a result, its price is up around 1 000% year to date, eclipsing bitcoin’s rise. Musk, revelling in the social media excitement and speculation, tweeted: “I am become meme, destroyer of shorts.”

Rather like the financial-sector sophisticates who shook their heads when Redditors charged into videogame retailer GameStop Corp., creating a bubble that’s already deflating, some bitcoiners have chided Musk for inciting a doomed punt, adopting the tone of their “boomer” forebears. “You’ve actually become a destroyer of lives,” one tweeted. Cameron Winklevoss, one half of the famous Facebook twins, faced similar scorn when he cracked his own gag, saying dogecoin is “fun money” to the US dollar’s “funny money”.

The wagging fingers have a point. Musk’s recent run of market-moving tweets has helped drive irrational exuberance among locked-down traders looking for easy gains and crowd validation. Past run-ins with the Securities and Exchange Commission show that regulators don’t always see the funny side either.

Yet there’s a self-serving side to the outrage. Part of it is the realisation that it’s possible Musk’s past social media praise of bitcoin wasn’t as sincere as some had thought. The deeper fear is that if dogecoin ends up just another YOLO (you only live once) pump-and-dump in the crypto timeline, it will reflect badly on all tokens — even bitcoin, which has recently basked in the glow of being promoted on Wall Street as an alternative to gold.

Who let the doge out?

Bitcoin’s ability to keep reeling in institutional investors depends on its pitch as a digital safe haven disrupting analogue alternatives. Never mind that bitcoin works neither as a reliable market hedge in times of panic nor as a gold-like store of value, as its price gyrations throughout the Covid-19 pandemic have made clear. Hedge funds have taken the bait of a rapidly rising price and the hook of a macroeconomic narrative of an impending inflation-driven apocalypse. There’s speculation here, too: price momentum, the promise of outsize gains and artificially scarce supply in a market juiced by central-bank stimulus.

A crowd-driven rally in dogecoin, if it lasts, spoils the bitcoin purists’ story somewhat. Thrill-seeking bitcoin believers will wonder whether they’re missing out on easier money if doge is still alive and hitting record highs. Scratching the surface of its goofy image reveals a competitive economic narrative: While the canine token copies a lot of the original cryptocurrency’s features, it’s an expressly inflationary asset with a circulating supply of more than 100 billion. It’s faster to transact and easier to mine than bitcoin. If dogecoin’s price keeps popping, expect advocates to push stories offering a very different philosophy to drown out bitcoin’s HODL hoarders.

The problem for bitcoiners is that even a blowup of the dogecoin trade would leave their own favourite cryptocurrency potentially tainted by association. Unlike with GameStop, there aren’t obvious fundamentals to explain why dogecoin is overvalued while bitcoin would be undervalued. Debates about which is “better” might draw on technological use cases, security and adoption, but these don’t add up to dollar-and-cents estimates. Alexandre Stachtchenko, a board member of Paris-based blockchain association ADAN, says a Musk-driven boom-and-bust in dogecoin will make it harder to promote more serious projects: “A neophyte will not be able to tell the difference.”

He’s probably right to be concerned. When the initial coin offering bubble burst in late 2017, bitcoin wasn’t spared: Its price sank almost 90% over the course of a year and didn’t fully recover until last December. A crypto crash this time around might see hedge funds go back to putting bitcoin in the same bucket as dogecoin and others, not gold or the dollar — call it meme reversion.