The US Federal Reserve Chairman, Jerome Powell in a press conference was asked about a number of things from Gamestop to Dogecoin.
He was asked whether he believed there was a risk to the financial stability in trends such as the meme-inspired cryptocurrency Dogecoin. In essence, the question was whether Doge was going to upend the economy. While responding he mentioned that the asset prices were high and he talked about froth in equity markets. Stocks plummeted immediately after the Chair’s statement and people have been suspecting if there is going to be huge inflation coming.
The supply chain is in a different space and it is going to push prices up higher.
Powell’s comments came as a turning point for Dogecoin. Dogecoin is meme crypto that everyone thought has been dead for years and was resurrected because of Twitter, Reddit, and memes. Thus, the fact that market frothiness is being exemplified by this meme coin is incredible in itself and says a lot about the economy.
It is interesting to see the head of the Federal Reserve directly comment on Doge otherwise they are very conservative commenting on any sort of securities. They are reserved just because what they say causes a pulpit in the markets immediately the next day. However, it is interesting that Powell is addressing that right off the bat. It may also portend the future, as they are worried about how the monetary policy over the last year has worked. They want to assess how the policy has affected and will affect the future of the US securities market.
Dogecoin kind of shows that it is the money of the people and GameStop was a movement all about the democratization of stock participation.
There has been a lot of frenzy around cryptocurrency and people in fear of missing out have plunged into the crypto world. People are taking loans to get involved in stocks and things like dogecoin because that is how much it’s being talked about on social media. This has made people think that this is an easy way to get rich quickly. Over time, some people have been seen doing this with doge. They are talking about it on Twitter, they are on Reddit, and they are just pumping their money into it to try to get rich quickly. So essentially what does market frothiness mean for such investors and users?
Even in the hedge fund land, many people have realized that they have missed the greatest bull market of cryptocurrencies ever. They do not know what to do and are just scrolling through coin market cap looking for the next big thing. These investors have no idea what is going to happen. All they know is that they need their portfolio to pop 3X to compete with everyone else who did that.