Dogecoin and Altcoin Receive Scorching Criticism from the Bloomberg Analyst Team, What's the Reason?

Bittime - Sharp criticism of Dogecoin and other altcoins recently emerged from Michael McGlone, Head of Commodity Strategy at Bloomberg Intelligence. 

In his latest analysis, McGlone highlights the increasing risks in the cryptocurrency market. 

According to him, the market is currently filled with more than 2.4 million cryptocurrencies that he calls “Bitcoin wannabes” or Bitcoin clones. 

What makes this analysis important is its comparison to the dot-com bubble that rocked the financial world.

McGlone called Dogecoin, which has a market capitalization of around $68 billion (around Rp. 1,088 trillion), as one of the assets that does not have fundamentals like Bitcoin. 

He attributes Dogecoin's rapid growth to the dot-com bubble phenomenon of the late 1990s, when many internet-based companies emerged, only to end in a major market crash.

“Dogecoin is one of 2.4 million cryptocurrencies that future generations will likely see as the dot-com bubble,” said McGlone.

Read also: Why Did Dogecoin Price Increase Today? Listen to this explanation!

Risks on “Cryptocurrencies with Unlimited Supply”

McGlone also highlighted the big downside of Dogecoin and other altcoins having unlimited supply. 

In contrast to Bitcoin which has a fixed supply limit of 21 million units, assets with unlimited supply are considered less reliable as a store of value. 

According to McGlone, such an asset would be hard-pressed to rival Bitcoin, which has already established its position as a value asset.

The analogy with the dot-com bubble further reinforces McGlone's concerns. At that time, internet companies emerged with very high valuations, but most failed to survive. 

McGlone believes that more than 200 meme coins and many other smaller altcoins may suffer a similar fate.

Confusing Market Capitalization

Dogecoin's market capitalization recently reached $55 billion (around IDR 880 trillion) making McGlone compare it with the valuation of Bank of New York Mellon (BNY Mellon), one of the oldest banks in the United States. 

According to McGlone, BNY Mellon, which is expected to generate $19.1 billion in revenue by 2025, has real value. In contrast, Dogecoin as a speculative asset does not generate any income.

Peter Brandt, a well-known financial trader, also voiced similar concerns. In his latest statement, he emphasized that speculative digital assets are very dangerous for investors. 

Brandt noted that many investors use high leverage to seek short-term profits from altcoins and meme coins. He warned that these speculative assets carry huge risks for investors.

According to Brandt, in the event of a market correction, Bitcoin could lose half of its value, while altcoins could lose up to 90%. Meme coins could even disappear from the market completely because they have no real use and rely solely on hype to maintain their value.

Read also: Chances of DOGE ETF being Approved Decrease, Turns Out This Is the Cause!

FAQs About Dogecoin

What is Dogecoin (DOGE)?

Dogecoin (DOGE) is a meme-based cryptocurrency that is now the most popular of its kind. DOGE is gaining popularity thanks to a very active community. In fact, Elon Musk is one of his fans.

How did Dogecoin start?

The Dogecoin project was launched in 2013 by Billy Markus and Jackson Palmer. At first, DOGE was better known as a form of satire on Bitcoin.

What differentiates DOGE from other cryptocurrencies?

DOGE has unique characteristics, namely its relaxed and approachable nature. The concept of DOGE is built around the Shiba Inu dog meme, which makes it different from other more serious cryptocurrencies.

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Reference 

Insight, Dogecoin and altcoins critiqued by Bloomberg analyst, accessed January 7, 2025.

Coinmaketcap, Dogecoin Coinmarketcap, accessed January 7, 2025.

Author: Y