The price of Dogecoin has skyrocketed after tweets from Elon Musk, Snoop Dogg, and Gene Simmons showed their support. The cryptocurrency was only started as a joke between techy friends and is now being talked about alongside industry leaders Bitcoin and Ethereum.
Jackson Palmer and Billy Markus wanted to satirise the crypto industry with an altcoin based on the doge meme that became popular almost 10 years ago. While it started as a joke, large supply and low price made it perfect for micro-tipping on social media platforms. Also, unlike Bitcoin, there is no theoretical limit to the supply of Dogecoins.
The Power of Social Media
Up until January 28, 2021, Dogecoin hadn’t broken the one cent barrier. It was flirting with the resistance level for many months until Bitcoin surged and Dogecoin managed to hold onto the coattails of the price spike reaching almost $0.08 in a single day.
By the end of January 2021, Dogecoin’s value fell to $0.024 and everyone thought matter would return to normal. What they didn’t expect was some random intervention by a band of celebrities and the richest man in the world, Elon Musk.
This single word tweet, and another stating that Dogecoin is “the people’s crypto”, set off another price explosion and the altcoin’s value was up 50% by the end of the day.
Now, Musk is known for behaving mischievously on social media, but this is on another level. You don’t get to be the richest man in the world without knowing how powerful the word’s of such people can be.
During the recent shenanigans with Reddit group WallStreetBets taking on the hedge funds over them shorting GameStop stock, Musk chimed in on several occasions to voice his support which, of course, encouraged even more people to start buying.
Last week he changed his Twitter biography to “#bitcoin” sending the price of that cryptocurrency past the $38,000 mark to set another record in recent months.
What on Earth will he be publicly supporting next? He should watch his step as it is only a couple of years since he falsely tweeted that he had secured funding to take Tesla private at a share value of $420. The share price shot up more than 13% leaving himself in a spot of bother with US regulators over deliberately affecting the value of the stock.
Is Crypto Really the Future?
Tesla just announced that it bought $1.5 billion of Bitcoin and expects to be accepting it as payment in the near future. Although Musk himself didn’t make this announcement, the news was enough to send the price of Bitcoin into another frenzy. The price of the world’s leading cryptocurrency jumped up 17% to $44,220.
Maybe Musk will land himself in more hot water if he plays more games to affect market prices.
Regardless of how intentional Musk’s behaviour was, it is undeniable that he may have just started another era in the world of cryptocurrency. Analysts are calling Tesla’s decision a “game-changer”.
Eric Turner, vice-president of market intelligence at cryptocurrency research firm Messari said:
"I think we will see an acceleration of companies looking to allocate to Bitcoin now that Tesla has made the first move. One of the largest companies in the world now owns Bitcoin and by extension, every investor that owns Tesla, or even just an S&P 500 fund, has exposure to it as well."
We will soon see if Elon Musk really does think that Dogecoin is the real “people’s crypto”.
