Elon Musk’s purchase of Twitter has given dogecoin, the meme cryptocurrency he popularized, a new leash of life.
After the Tesla magnate closed the $44 billion deal, the price of Dogecoin doubled. On October 27, it was trading at about $0.07 when Musk announced his ownership by tweeting “the bird is freed.” It was $0.16 five days later.
That might not sound like much, but according to data platform CoinGecko, it gave the extremely volatile cryptocurrency a market value of $21 billion.
Not bad for a coin named after an internet meme of a Shiba Inu dog and created as a “joke” mocking the wild speculation in the cryptocurrency market.
“Trading dogecoin around Elon tweets has become a lucrative form of speculation,” said Matthew Dibb, chief operating officer of Singapore-based crypto investment manager Stack Funds.
Since its humorous launch by two software engineers in 2013, Musk has in fact had a significant impact on dogecoin’s growth. His tweets endorsing the coin, including one that referred to it as “the people’s crypto,” helped its price rise by about 4,000% in 2021, seemingly out of nowhere.
Crypto observers claimed that investor bets that Musk would integrate doge into the platform’s payment system were what caused the most recent price increase, which came after the Twitter deal.
“There’s a lot of speculation that Twitter will provide a test bed for doge adoption and experimentation for different uses,” Dibb added.
According to CoinGecko, Dogecoin is currently trading at around $0.12 and is the eighth-largest cryptocurrency with a market cap of roughly $16 billion. It has since given up some of its gains.
The so-called meme coin reached a high of $0.63 in May of last year, but it has since been destroyed along with other well-known crypto assets like bitcoin and ether due to macro-doom and investor indifference to risky markets. Doge is down 57% over the last 12 months, despite the most recent rally.
Despite this, the 150 digital assets in the CoinDesk Market Index’s top performer list for October was doge, according to the cryptocurrency market news website Coindesk.
According to CoinMarketCap, its percentage of the $1 trillion global cryptocurrency market cap for the year up until the end of October was 1%, far less than bitcoin’s 39%. It is currently 1.58%.
Doge has led to the rise of other dog-themed coins, most notably Shiba Inu, which shares the same motif as doge and is made to work with the Ethereum blockchain. Shib, which is only worth $0.00001, increased by a third in the days following Musk’s completion of the Twitter deal.
Doge and shib have nearly unlimited supplies, in contrast to bitcoin, so it would take more than just speculative hoarding to raise their prices.
Musk’s tweet from last week featuring a photo of the Shiba Inu dog sporting a Twitter t-shirt sparked speculation that the company may one day permit cryptocurrency payments using dog tokens.
The early rally, however, has stalled because many cryptocurrency investors are uncertain of his level of commitment to dogecoin.
For example, when Musk, the richest man in the world, referred to dogecoin as a “hustle” on a talk show in May of last year, the price of the cryptocurrency plummeted.
Then, in January of this year, Tesla began accepting dogecoin in exchange for its goods, including the “Giga Texas” belt buckles and miniature electric vehicle models.
Doge can also be used to purchase the recently released fragrance “Burnt Hair” by Musk.
(Adapted from ThePrint.in)