Cryptocurrency keeps soaring, from the more established coins to so-called "meme coins" like Dogecoin. Until early Sunday morning, Dogecoin in particular had been on a tear. It was boosted by ongoing praise and (repurposed) memes by Tesla founder Elon Musk. Dogecoin spiked just before Musk's appearance on Saturday Night Live, before promptly crashing some three minutes into the show. In perhaps the world's best illustration of "buy the rumor, sell the facts", Dogecoin lost some 40% at its lowest point in the wake of Musk's appearance.
Dogecoin is not the only dog-themed joke cryptocurrency that's gone viral, despite having an unclear or nonexistent use case. Shiba Inu coin (SHIB), which billed itself as "the Dogecoin killer", skyrocketed in value in early May. Its price rose 1500% in a single week when exchanges Crypto.com, OKEx, and Binance added trading support for SHIB. The buzz hit the NFL too, with Miami Dolphins wide receiver Preston Williams and Cleveland Browns wide receiver Rashard Higgins both tweeting about SHIB.
SHIB was no stranger to hype, even before football players were talking about it. Part of Shiba coin's marketing pitch was that 50% of its entire supply was given to Ethereum co-founder Vitalik Buterin, by sending them to Buterin's public crypto wallet. As Ekin Genc reported for Decrypt.co:
Buterin has nothing to do with SHIB. The token’s anonymous developers said in their white paper (“woofpaper”) that they sent 50% of the coin supply to Buterin’s address to remove them from circulation. That way the price may go up—as long as the demand continues to surge—and the supply is capped.
The obvious question is: why? Why did the Shiba coin creators think it was a good idea to hand over half of the liquidity of the entire coin to Buterin?
- The Block Crypto theorized that it was because Buterin was wealthy enough and wouldn't need the cash, and would just leave his Shiba in his wallet.
- Others have guessed that it was a publicity stunt. By having Buterin's name attached to it (despite him never participating nor consenting to the gift of half the supply) gave the project a helpful level of hype.
Obviously, simply handing Buterin half the supply didn't come without risks. The Shiba Inu team, which is anonymous, even warned about the potential for "VB" (Vitalik Buren) to "rug" or crater the crytpo. But they waved the risk away saying "there is no greatness without a vulnerable point":
Buterin slashed right through Shiba coin's vulnerable point on May 12th, swapping Shiba coin for Ethereum over the course of several transactions.
It wasn't just Shiba Inu coin that had gifted Buterin coins. So did other memecoins Akita Inu (AKITA) and Dogelon Mars (ELON). He converted millions of dollars worth of all these memecoins into Ethereum today. The Block Crypto reports:
Buterin began sending the tokens in batches to Uniswap and selling them for ETH. He sold 660 billion SHIB, 140 billion AKITA and 43 billion ELON...creating a total of 15,719 ETH, an amount worth about $63 million.
Buterin only seemed to stop converting the memecoins to Ethereum when a series of his transactions began failing, as Larry Cermak of the Block noticed:
When the transactions to covert the memecoins began failing, he sent some of the remaining coins to charities. He sent some $1 billion in SHIB to a crypto fund set up for COVID relief in India. He sent combinations of memecoins and Ethereum to other charities:
The largest tranche — 13,292 ETH — was sent to Givewell, a non-profit charity assessment organization.
The Ethereum creator also sent 1,000 ETH and 430 billion ELON tokens ($215,000) to the Methuselah Foundation, which focuses on making people live longer. He sent 1,050 ETH to the Machine Intelligence Research Institute, which focuses on ensuring AI has a positive impact.
SHIB plummeted 38% after Buterin started dumping his holdings.
Crypto watchers reactions are widely mixed. Some have praised Buterin's actions as a way to help cool the mania around memecoins or discourage scam coins. Others are criticizing his move as an unfair "rugpull" – a crypto term for when rogue developers abandon a project and take off with investors' money.
As people who missed out on Bitcoin or Dogecoin tried to find the next crypto moonshot, massive volumes poured into memecoins like Shiba. This led to congestion in the Ethereum network much of crypto runs on, making transactions more expensive. In order to send, receive, or swap between currencies on the Ethereum network, you must pay some amount of Ethereum in fees. These fees are paid to Ethereum miners and are known as "gas fees". When there's lots of congestion on the network, fees can spike. Cooling the mania in memecoins might lower the network congestion.
One question looms large: Why did vitalik do this in public? He could have moved the dogecoin memes out of his public wallet and sent it to another address. Cermak theorized that Buterin may have done this in the open to send a statement, throwing cold water on memecoins broadly.
If that weren't enough excitement for one day in crypto, a few hours later, Elon Musk tweeted that Tesla would no longer be accepting Bitcoin as payment for the firm's electric vehicles. He pointed to the environmental impact of Bitcoin as the underlying reason. But Business Insider columnist Linette Lopez expressed skepticism, noting that Bitcoin's climate problems are nothing new, and a more likely explanation is Tesla's Bitcoin holdings were creating economic concerns for the firm:
Bitcoin tanked nearly 15% following Musk's (6:06pm ET) tweet, before recovering somewhat:
The allure of crypto's "get rich quick" potential remains in full force. But today's events show that the marketplace remains incredibly volatile, with big promises by often questionable coin boosters – and none of the investor protections present in more regulated markets.
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