“Dogecoin is an unstoppable financial vehicle that will take over the world” Elon Musk affirmed. It was in May 2021, during a broadcast of Saturday evening live. He posed as a financial expert.
“So, it’s a commotion?” asked comedian Michael Che.
“Yes, it’s a commotion,” the Tesla founder replied with a laugh.
Dogecoin is the queen of memecoins — digital assets without a technological base to support them – which are skyrocketing under the fire of social media. The closest crypto enthusiasts of this currency clearly remember the statements made by the richest man in the world. If you look at the price of this cryptocurrency on CoinMarketCap, the page marks the date of this SNL episode as one of the most notable moments for the asset: after several days of waiting on what Musk would say (in the past, he had already declared it his favorite), the cryptocurrency lost more than a third of its value.
A few months later, Musk shook the market again with a poll on Twitter: “Would you Tesla accept Doge? He was referring to the possibility that customers could buy their cars with this memecoin, something that still remains up in the air. In December of the same year, he declared that his company would accept payment for certain products in this digital currency. In just a few minutes, the asset rose 33%. In short: when Musk speaks, Dogecoin responds.
But beyond just talking about it, Musk also owns some of that currency. His assets have indeed been the subject of speculation on several occasions. Even today, it is still unclear how much he owns. Last January, in a conversation on X Spaces, he declared that he owned “a lot of DOGE”, without detailing the amount.
This asset was created by two friends – Adobe engineer Jackson Palmer and software developer Billy Markus – in 2013. It was born as a satirical alternative to Bitcoin fever, in order to mock an industry that had attracted too much money. To symbolize the joke (and the trump card), they used the image of a Japanese dog breed – the Shiba Inu – which had become the epitome of the Internet meme three years earlier.
Although he had no relationship with the founders of the currency, Musk ended up sponsoring it… and presenting it to the White House. Tesla founder, alongside businessman Vivek Ramaswamy, will lead new company Ministry of Government Effectiveness. The acronym for this department – DOGE – is also how the currency is known in crypto markets. Musk’s appointment to the new Republican administration has boosted the value of this token, which has increased by 130% since the US presidential election, reaching almost $0.39 per unit.
After starting as a joke, Dogecoin has become the seventh largest cryptocurrency, with a market value of around $56 billion. Jorge Soriano, CEO of the Criptán trading platform, believes that this asset owes a lot to the founder of Tesla. “If Elon Musk hadn’t talked so much about Dogecoin, I don’t think the currency would be where it is today,” he shrugs. The customization of DOGE around Musk is evident. Experts warn of the risks this can pose for investors, especially in the long term. “If the value of Dogecoin is excessively linked to the figure of Elon Musk, any change in his (level of) interest or reputation may disproportionately impact the asset. The biggest risk is volatility and lack of confidence in the long term,” warns Soriano.
Abel Peña, commercial director of Bit2Me, agrees with this interpretation. “The personalization of DOGE around Musk is risky, because it centralizes the perception of a currency that should be decentralized. This makes it more dependent on (Musk’s) public image and increases (the cryptocurrency’s) volatility, complicating its adoption as a reliable asset,” he notes.
It is true that the nature of Dogecoin is still a joke, to the point that it has become the memecoin par excellence. Simply put, it is a currency that uses the power of speculation and the coordinated behavior of the online community to challenge the traditional financial system.
Carlos Salinas, professor of Blockchain and investment in digital assets at the IEB in Madrid, explains to EL PAÍS that the crypto community is a very important element for this type of assets. “Memecoins are outside the purely financial orbit. It is more of a cult theme, an entertainment asset. The main driver that motivates them is community and cultural theme.
Dogecoin is based on a humorous and quirky culture – a way for people to come together and have fun, while exploring the possibilities of cryptocurrencies. The Dogecoin Foundation – whose motto is “Do nothing but good every day” – describes itself as “the accidental crypto movement that makes people smile” and describes the asset as a “currency of the people, for the people and by the people “.
Despite the intentions of its followers, it is clear that risk is the hallmark of these assets. There are very pronounced rises and falls in their value, making other digital currencies appear stable. Dogecoin’s historical volatility – over a 260-day period – is double that of Bitcoin (87.22 against 43.29 points), according to Bloomberg data. While in general meme cryptocurrencies soar in the heat of social media due to user trends, the crypto community and general sentiment, for Dogecoin what really matters is what Musk says and done. “This type of support has a very strong speculative component. It’s very personal and there is clearly a risk of manipulation in these investments,” warns Salinas.
However, he rules out Musk manipulating the market, as he does not see the Tesla CEO gaining personal benefit from the rise and fall of this asset. “It might bring him unwanted attention.” It’s negative to heat up the market…it wouldn’t be good for him personally. Rather, I think it’s a way for him to communicate with certain communities,” says Salinas.
In the past, the tycoon had already faced trial for allegedly influencing the price of cryptocurrency. In 2022, some investors sued Musk, accusing him of manipulating the market through his Twitter posts and appearances on television shows, such as Saturday evening live. These investors said they suffered losses due to Musk’s statements regarding the asset. However, the judge in charge of the case dismissed the complaint, arguing that it was not possible to prove fraudulent activity on the part of the businessman based on his tweets.
While experts are reluctant to talk about price manipulation, Soriano believes that the Tesla CEO – who nicknamed himself “Dogefather”, in reference to The godfather – heats up the market. “He always plays on the edge of legality. From my perspective, it not only draws attention to DOGE, but to the entire digital asset industry. He adds: “For me the bottom line is: why do people continue to hold it (hold a cryptocurrency for a long time without selling it)? Do they expect Musk to continue to promote it (and) increase its price before selling it? Or do they really agree with the cultural values behind this memecoin? Excessive dependence on a single figure is a sign of fragility in terms of the sustainability and maturity of the project,” he concludes.
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