Why Dogecoin Was Dogged by Sell-offs Today
Key Points
The ETF's investors will be paid out in cash next month.
Meanwhile, macroeconomic developments were generally unfavorable to cryptocurrencies.
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High-profile meme coin Dogecoin (CRYPTO: DOGE) wasn't very high on the investor popularity scale on Thursday. In the hours after 4 p.m. ET, its price was sinking by almost 5%. This was due to global macroeconomic developments and the shutdown of a spot Dogecoin exchange-traded fund (ETF).
Bitwise bows out
Of the two developments, the demise of the ETF was the more direct and likely more impactful. That morning Bitwise Dogecoin ETF's sponsor, Bitwise Investment Advisors, announced that it planned to close and liquidate the ETF.
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At least there's something of a grace period, as the sponsor said its final day of trading will be Oct. 13, and liquidation is to occur on Oct. 22. Shareholders will be paid in cash via their brokerages or other financial intermediaries.
There are far fewer Dogecoin ETFs than for more high-profile cryptos like Bitcoin. The shutdown of this one indicates demand among the general public for the meme coin is limited, in contrast to its more popular peers.
The Bitwise Dogecoin ETF liquidation announcement occurred on a day when yields for benchmark fixed-income securities rose. When that occurs, demand for riskier assets -- cryptocurrencies included -- tends to soften, as the appetite grows for investments considered safer.
Bond yields are rising due to a confluence of factors, not least of which is persistent inflation, as indicated by the generally in-line producer price index update from the Bureau of Labor Statistics Thursday morning.
No doggie treat for you
To its credit, Dogecoin's developer has labored to make it useful and practical. Yet it's never really shed its deserved reputation as a "fun coin," an ultra-low-priced digital currency for which it's hard to find much use. I've never considered it a promising long-term investment, and given the ETF's closure, it seems I'm not the only one bearish on the dog-themed coin.
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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
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