Why Dogecoin Just Slid by 6%

What happened

Dogecoin (DOGE +3.85%) was in the doghouse Friday morning. As of 10:40 a.m. EDT, Elon Musk's favorite cryptocurrency had dropped by 6.2% from Thursday's value, and folks looking for a reason why might want to turn their attention to Fred Ehrsam.

In an interview Wednesday on Bloomberg TV, Ehrsam, the co-founder of cryptocurrency trading platform Coinbase (COIN +2.48%), delivered this prediction: "90% of NFTs produced ... will have little to no value in three to five years."

Image source: Getty Images.

So what

Now it's crucial to point out: Despite the fact that both are reliant on blockchain technology, NFTs -- non-fungible tokens, which are used to certify the ownership of digital assets -- are entirely different from cryptocurrencies. But both NFTs and crypto are relatively new technologies, and the distinctions may get a bit fuzzy in many traders' minds.

So hearing the co-founder of Coinbase say that nine out of every 10 NFTs will be utterly worthless in just a few years may well have shaken investor confidence in Dogecoin as well. The fact that in the same interview, Ehrsam warned that most of the "millions and millions of cryptocurrencies and crypto assets" that he anticipates will be created in the coming years won't work -- and that governments could flub their efforts to regulate the ones that do -- probably isn't doing anything good for investors in Dogecoin either.

Now what

Yet it's worth pointing out that in the same interview in which Ehrsam panned NFTs, predicted the eventual demise of "most" cryptocurrencies, and warned of the dangers of government cryptocurrency regulation, the Coinbase co-founder also said this:

"If crypto has taught us anything, it's never to dismiss a good meme that couldn't later manifest into more concrete progress." He was responding to a question about Dogecoin when making that comment, by the way, and the implication therefore seems to be that investors shouldn't assume that Dogecoin will be one of the cryptocurrencies to fail.

Curiously, that seems to be exactly what traders are doing Friday.