He’s a Dogecoin Millionaire. And He’s Not Selling.

He’s a Dogecoin Millionaire. And He’s Not Selling.
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He’s a Dogecoin Millionaire. And He’s Not Selling.

He’s a Dogecoin Millionaire. And He’s Not Promoting.

Final February, when Glauber Contessoto determined to speculate his life financial savings in Dogecoin, his mates had considerations.

“They had been all like, you’re loopy,” he stated. “It’s a joke coin. It’s a meme. It’s going to crash.”

Their skepticism was warranted. In spite of everything, Dogecoin is a joke — a digital foreign money began in 2013 by a pair of programmers who determined to spoof the cryptocurrency craze by creating their very own digital cash based mostly on a meme about Doge, a speaking Shiba Inu pet. And investing cash in obscure cryptocurrencies has, traditionally, been akin to tossing it onto a bonfire.

However Mr. Contessoto, 33, who works at a Los Angeles hip-hop media firm, is not any strange buy-and-hold investor. He’s among the many many thrill-seeking amateurs who’ve leapt headfirst into the markets in current months, utilizing stock-trading apps like Robinhood to chase outsize beneficial properties on dangerous, speculative bets.

In February, after studying a Reddit thread about Dogecoin’s potential, Mr. Contessoto determined to go all in. He maxed out his bank cards, borrowed cash utilizing Robinhood’s margin buying and selling function and spent all the things he had on the digital foreign money — investing about $250,000 in all. Then, he watched his cellphone obsessively as Dogecoin turned an web phenomenon whose worth eclipsed that of blue-chip firms like Twitter and Basic Motors.

The worth of his Dogecoin holdings at the moment? Roughly $2 million.

On the floor, Mr. Contessoto — who dropped out of faculty and has no formal monetary coaching — appears no totally different from a fortunate gambler who walks into a on line casino, bets all his chips on a single roulette spin and walks out a millionaire.

However he’s additionally emblematic of a new sort of hyper-online investor who’s successful by making use of the abilities of the digital consideration economic system — sharing memes, cultivating buzz, producing limitless streams of content material for social media — to the monetary markets.

These buyers, principally younger males, don’t behave rationally within the old style, Homo economicus sense. They choose investments not based mostly on their underlying fundamentals or the estimates of Wall Road analysts, however on looser standards, similar to how humorous they’re, how futuristic they appear or what number of celebrities are tweeting about them. Their philosophy is that in at the moment’s media-saturated world, consideration is essentially the most beneficial commodity of all, and that something that’s attracting a nice deal of it have to be value one thing.

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“Memes are the language of the millennials,” Mr. Contessoto stated. “Now we’re going to have a meme matched with a foreign money.”

Mr. Contessoto, an affable, bearded hip-hop fan who goes by the nickname Jaysn Prolifiq, is a first-generation immigrant whose dad and mom got here to the USA from Brazil when he was 6. As a youngster in suburban Maryland, he noticed his household combating cash, and he vowed to turn into wealthy. He found a love of hip-hop music as a teenager, and after college, he moved to Los Angeles, the place he took a job making $36,000 a yr as an entry-level video editor whereas attempting to ebook gigs for an up-and-coming rapper he knew.

His dream was to avoid wasting up sufficient cash to purchase a home — one the place he and his hip-hop mates might reside whereas making music collectively.

However that sort of money was elusive, and he spent a number of years crashing on couches whereas attempting to avoid wasting sufficient for a down fee.

In 2019, he began shopping for shares on Robinhood, the commission-free buying and selling app. He caught to huge, well-known firms like Tesla and Uber, and when these trades made cash, he purchased extra. And in January 2021, he watched in fascination as a group of merchants on Reddit efficiently boosted the inventory worth of GameStop, squeezing the hedge funds that had guess towards the online game retailer and making tens of millions for themselves within the course of. (He tried to get in on the GameStop commerce however he was too late, and he ended up shedding most of his stake.)

Shortly after the GameStop saga, Mr. Contessoto was looking Reddit when he noticed a publish about Dogecoin. He’d heard of the foreign money earlier than. (Elon Musk, who’s to Dogecoin followers roughly what Pope Francis is to Catholics, had known as it the “folks’s crypto.”) However as he did extra analysis, he turned satisfied that Dogecoin’s jokey, approachable picture would possibly make it the subsequent GameStop.

“Dogecoin has the perfect branding of all cryptocurrency,” he stated. “Should you put in entrance of me all of the symbols of Ethereum, Bitcoin, Litecoin — all the things simply seems tremendous excessive tech and futuristic. And Dogecoin simply seems like: Hey, guys, what’s up?”

He imagines that newbies investing in cryptocurrency for the primary time would possibly gravitate towards one thing enjoyable and recognizable, and that Dogecoin would possibly ultimately turn into a sort of on-ramp to the bigger world of digital cash.

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“I really feel like ultimately we’re all going to be shopping for and promoting issues with memes, and Dogecoin goes to paved the way,” he stated.

Unusual as his funding thesis might sound, it’s onerous to argue with the outcomes. Even after a current crash following Mr. Musk’s look on “Saturday Night time Stay” (during which he joked about Dogecoin being a “hustle”), Dogecoin stays a very profitable commerce. A greenback invested in Dogecoin on Jan. 1 can be value $203 at the moment — rather more than a comparable funding in Bitcoin, Ethereum or any inventory within the S&P 500.

Dogecoin’s stratospheric rise has additionally fueled loads of grumbling amongst cryptocurrency buffs, who see it as a cheesy sideshow that overshadows extra critical makes use of of cryptocurrency. One among Dogecoin’s authentic creators has disavowed the coin, and even Mr. Musk has warned buyers to not over-speculate in cryptocurrency. (Mr. Musk just lately despatched the crypto markets into upheaval once more, after he introduced that Tesla would now not settle for Bitcoin.)

What explains Dogecoin’s sturdiness, then?

There’s little question that Dogecoin mania, like GameStop mania earlier than it, is not less than partly attributable to some mixture of pandemic-era boredom and the everlasting enchantment of get-rich-quick schemes.

However there could also be extra structural forces at work. Over the previous few years, hovering housing prices, document pupil mortgage debt and traditionally low rates of interest have made it tougher for some younger folks to think about attaining monetary stability by slowly working their method up the profession ladder and saving cash paycheck by paycheck, the best way their dad and mom did.

As a substitute of ladders, these individuals are on the lookout for trampolines — dangerous, risky investments that would both end in a life-changing windfall or ship them proper again to the place they began.

Mr. Contessoto is a prime case research. He makes $60,000 a yr at his job now — a first rate dwelling, however nowhere close to sufficient to afford a dwelling in Los Angeles, the place the median dwelling prices almost $1 million. He drives a beat-up Toyota, and spent years dwelling frugally. However in his 30s, nonetheless with no home to his title, he determined to go on the lookout for one thing that would change his fortunes in a single day, and ended up at Dogecoin’s door.

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When Mr. Contessoto recollects the best way he used to pursue wealth — working onerous, reducing again on bills, saving some cash from each paycheck — he sees proof of a system that’s rigged towards common folks.

“I really feel like these specialists on TV, the older technology of previous cash and wealth, they attempt to scare folks into staying protected so no one will get too wealthy,” he instructed me.

His new motto, he stated, is “scared cash don’t make cash.”

Many issues about Mr. Contessoto’s investing philosophy would flip a conventional monetary adviser’s abdomen. However wildest of all is that regardless of his spectacular beneficial properties, he has not but cashed out his Dogecoin tens of millions. He thinks the foreign money’s worth will proceed to rise, and he doesn’t need to miss out on future income by promoting too quickly. (He does plan to promote 10 % of his stake subsequent yr, as soon as his earnings will likely be labeled as long-term capital beneficial properties and taxed at a decrease price.)

As a substitute, he’s branding himself as a Dogecoin skilled, adopting nicknames like “the Dogefather” and “Slumdoge Millionaire” and making YouTube movies selling Dogecoin to others.

“I’m bullish as they arrive within the Dogecoin neighborhood,” he stated. “If this exceeded my expectations of Dogecoin, and I solely hit it in two months, think about the place it’ll be in a yr.”

After all, as with every risky funding, there may be a actual probability that Mr. Contessoto’s Dogecoin holdings might lose most or all of their worth, and that his dream of homeownership might once more be out of attain. Already, the value of Dogecoin has fallen almost 50 % from its all-time excessive, shaving a whole bunch of hundreds of {dollars} off Mr. Contessoto’s portfolio.

However gamblers hardly ever depart the desk the primary time they lose, and Mr. Contessoto’s dedication to “HODLing” — an acronym favored by cryptocurrency merchants that stands for “maintain on for expensive life” — is buoying him by means of the current market turbulence. Earlier this week, he posted a screenshot of his cryptocurrency buying and selling app, displaying that he’d purchased extra. And on Thursday, when the worth of his Dogecoin holdings fell to $1.5 million, roughly half what it was on the peak, he posted one other screenshot of his account on Reddit.

“If I can hodl, you may HODL!” the caption learn.

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