The GME squeeze and the Dogecoin rally: how social media can affect stock and crypto markets

Dogecoin ($DOGE) is a meme-based cryptocurrency created by programmer Billy Markus who wanted to joke on cryptocurrencies – Bitcoin, above all – with a new "fun cryptocurrency" that could be affordable even for the lowest class of people (Chohan, 2021). The DOGE crypto references the Doge-meme, an internet meme that became popular in 2013 and that consists in a Shiba Inu dog along with multicolored Comic Sans text, and for this reason it is highly acclaimed and appreciated by the online community (Chohan, 2021). This crypto does not have an upward limit of supply (Chohan, 2021) and it has always experienced high volatility since its creation in late 2013 (for example, it registered a +300% between Dec. 18th and Dec. 19th, 2013 only to have a -80% plummet three days later) (Chohan, 2021). Dogecoin is mainly used for the purchase of real estate and pornography and for online gambling and there are only three ATMs in the world that support Dogecoin (Chohan, 2021). DOGE has a community of its own, which grew exponentially between July 2020 and May 2021, that is renowned for using the phrase "To the moon!" to push the coin's value and to describe its bullish sentiment (Chohan, 2021). In particular, Dogecoin became popular to the wider public in July 2020 following a TikTok trend that aimed to push the crypto's price to $1 (Chohan, 2021) and most importantly following its public endorsement by the South African tycoon Elon Musk via its official Twitter account (Ante, 2021). DOGE gained even more momentum in January 2021 when Reddit users and casual retail investors heavily invested in the crypto, galvanized by the GME squeeze frenzy and by Elon Musk's tweet of Jan. 28th consisting in a photo of a "Dogue" magazine (Ante, 2021; Chohan, 2021) subtlety referencing the crypto's name (Figure 5). In fact, on Jan. 28th Robinhood restricted the trade of GME on their platform and users moved their attention to the cryptocurrencies market (La Morgia et al., 2021) finding in Dogecoin the perfect new "investing meme". [...]