Why Dogecoin Is Spiking Today

Dogecoin (CRYPTO: DOGE) is up on Tuesday. Over the last 24 hours, the cryptocurrency was trading up 4.4% at its highest. The spike comes as the S&P 500 (SNPINDEX: ^GSPC) and the Nasdaq Composite (NASDAQINDEX: ^IXIC) closed up 1.1% and 1.4%, respectively.

Dogecoin and most of the crypto market were up today after Jerome Powell spoke to Congress, revealing the Fed is adopting a more crypto-friendly approach. Developments in the Iran-Israel conflict also boosted markets.

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The Fed takes a friendly tone toward crypto

Federal Reserve Chair Jerome Powell confirmed on Tuesday that U.S. banks can serve cryptocurrency firms, so long as they follow specific risk management and consumer protection rules. Powell emphasized that the Fed won't block lawful bank-crypto relationships and has eliminated "reputational risk" from its bank supervision framework, aligning with recent changes by the FDIC and OCC.

These comments signal policy shifts that remove key barriers that had hindered crypto access to traditional banking. Investors across the crypto market were enthusiastic about what this means for the future of digital currencies, including Dogecoin.

Image source: Getty Images.

Investors bet global conflict will ease

Tensions were high today after a ceasefire in the Israel-Iran war broke down. Still, investors appeared encouraged by Iran's somewhat limited response to U.S. strikes on its nuclear facilities, and markets, including crypto, were up.

Dogecoin is still a meme coin

Despite today's jump, I do not recommend investing in Dogecoin. The fact is that it is a meme coin; its value is derived not from utility, but from "vibes." That makes it incredibly volatile and subject to wild swings in price, and long-term value can be wiped out on a whim.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.