NextGen Investing: Making sense of dogecoin's rise

For anyone who still thinks dogecoin is a joke — especially after Elon Musk’s comical explanation of the cryptocurrency while hosting "Saturday Night Live" — there are plenty of owners of the digital token laughing all the way to the bank. Dogecoin has risen astronomically on its way to becoming the latest cryptomania buzzword. If you had $100 worth of dogecoins a year ago, their value would have been more than $30,000 on May 5, when the cryptocurrency hit an all-time high.

Dogecoin has become the destination for a horde of day traders egged on by internet buzz, sparked by an endorsement from billionaire Musk and stoked by a self-propelling buying frenzy. Dogecoin buying got so fevered earlier this month, Robinhood’s trading app crashed.

Created in 2013 as a joke to make fun of bitcoin, the meme-inspired token with the Shiba Inu dog breed as its logo seemed more fun than bitcoin and has been adopted by a community of diehards.

While it’s difficult to assign firm reasons for dogecoin’s ascent, a few factors have fueled the gains. On April 20, a day normally associated with pot, some users got #DogeDay trending to push up the price. Celebrities from Musk to the Dallas Mavericks’ billionaire owner Mark Cuban also jumped on the bandwagon. The Gemini crypto exchange backed by the Winklevoss twins recently announced it will enable trading of the coin.

While its meteoric rise is similar to that of bitcoin, crypto purists fear dogecoin is a distraction from their grand project of deploying blockchain technology to revolutionize modern finance with everything from decentralized currencies to tokenized art. For those trying to lure big money and investors into the industry with old-school risk controls, dogecoin doesn’t help institutions take crypto seriously while being far too risky for most portfolios