Why Dogecoin Is Plummeting This Week

The cryptocurrency Dogecoin (CRYPTO: DOGE) saw its value sink this week. The meme coin is trading 15.5% lower as of 4:40 p.m. ET on Jan. 23 but was down as much as 17.5% earlier in the week. The slump comes as the S&P 500 gained 2% and the Nasdaq 100 gained 2.1% on the week.

Dogecoin is feeling the pressure of high-profile entrants into the meme coin space this week weakening its main value proposition in some investors' eyes.

Trump released his meme coin days before he was sworn in as president. Named Official Trump, it has the ticker $TRUMP. The token is intended as a meme -- made very clear by Official Trump's website -- not as a serious financial instrument. But as we've seen with Dogecoin and others, memes can be lucrative under the right circumstances.

Official Trump is up more than 400% since its launch, although it was up close to 1000% earlier in the week before losing roughly half its value.

Move over, Dogecoin!

The release of Official Trump -- followed closely by several others, including Official Melania Meme -- called into question a central narrative in Dogecoin's value. The dog-themed crypto is closely associated with Elon Musk, and investors may have hoped this proximity to the new president would boost its profile. With Trump and his team releasing several other memes that directly compete, the investment thesis no longer appears sound.

Beyond this, Official Trump's release ruffled feathers among some of crypto's faithful who see it as damaging to crypto's image. Many are hoping Trump's presidency will be a time when crypto continues to cement itself in mainstream finance, but the release of something like Official Trump could be seen to undermine that hope.