Dogecoin Co-Creator Says 99.9% Of Crypto Market Is Driven By 'Greater Fool Theory'

Dogecoin (DOGE) creator Billy Markus said Monday the cryptocurrency market is mostly driven by the ability of investors to sell their holdings to greater fools, an underlying tenet of the greater fool theory. 

What Happened: Markus made his comments in response to a tweet that bemoaned technologically sound projects being passed over by investors in favor of memes.

I agree with the greater fool theory driving most of crypto prices, but I’m honestly wondering what percent you think any crypto is purchased from utility vs greater fool theory

From my viewpoint it’s about 99.99% greater fool theory

— Shibetoshi Nakamoto (@BillyM2k) May 31, 2021

DOGE traded 9.49% higher at $0.33 at press time in a 24-hour period leading up to press time. The cryptocurrency rose by 2.67% against Bitcoin (BTC) but fell by 5.18% against Ethereum (ETH).

See Also: How to Buy Dogecoin (DOGE)

BTC traded 6.83% higher at $37,741.62 at press time, while ETH traded 15.89% higher at $2,723.88.

Why It Matters: Investors who adhere to the greater fool theory ignore valuations, earnings, data in general — referred to as fundamentals in financial parlance.

The downside of such a strategy is that they may be left holding the bag when no greater fools are left. Markus seemed to acknowledge the trend on Twitter.

need diamond straws

— Shibetoshi Nakamoto (@BillyM2k) May 31, 2021

DOGE has rallied 6,815.92% so far this year, buoyed by the so-called DOGE army that is made up of enthusiastic retail investors and high-profile backers like Tesla Inc TSLA CEO Elon Musk.

Retail investors often use terms such as diamond hands and paper hands on social media. While diamond hands refer to holding on to their investments when prices are falling, paper hands refer to investors who sell early. 

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