Melvin Capital, a hedge fund at the centre of the GameStop saga, lost more than $7bn (£5bn) last month as an online army of small investors pumped up the stock price of the US games retailer the fund had been short selling in a bet that its shares would tumble.

The hedge fund closed its position in GameStop at a loss last week, however Melvin investors including Point 72 and Citadel pumped in $2.75bn, helping it to end January with $8bn in assets, down from $12.5bn at the start of the year.

Melvin, founded in 2014 by Gabe Plotkin, who previously worked with Point 72's founder Steven Cohen, had heavily shorted GameStop, the video game retailer whose shares soared last month on the back of buying driven by members of Reddit's WallStreetBets forum. The fund's 53pc loss was first reported by The Wall Street Journal.

Meanwhile, the price of Dogecoin, a cryptocurrency first set up as a joke, crashed over the weekend after a huge spike driven by users of the internet forum Reddit quickly unwound.

Mimicking the stratospheric rise in GameStop, Dogecoin had climbed 900pc after the SatoshiStreetBets forum called for the coin to hit $1.

The digital currency was started as a joke referring to an internet meme featuring a shiba inu dog. A tweet from Tesla founder Elon Musk, interpreted as in support of the cryptocurrency, added to last week's frenzy.

Dogecoin fell by as much as 75pc over the weekend, trading as low as 2.2 cents per coin after hitting a lifetime peak of 8.8c on Friday as Reddit investors turned their attention to ­cryptocurrency.