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Rockets aren’t the only thing Elon Musk is sending into the stratosphere.
After a three-year fall, dogecoin leaves againjumping 250% since the election of Donald Trump – part of a broader wave of optimism in the industrydue to Trump’s courting of crypto advocates during his campaign.
Trump’s informal nomination of Musk to what he calls the Ministry of Government Effectiveness – DOGE for short – also helped pump up the dog theme coin.
This is not the first time that Musk, who describes himself as “the dog’s father“, fueled interest in dogecoin.
In May 2021, its price skyrocketed in anticipation of Appearance of Elon Musk on “Saturday Night Live.” During one skit, Musk played the role of a financial analyst in conversation with a Weekend Update host, who repeatedly asked him: “What is dogecoin?” After some obfuscation, Musk’s character finally admitted that it was a scam. The price of the piece went in free fall. A little over a year later, it was lost more than 90% of its maximum value.
The losses hit small investors hard. In 2022, one of them filed a class action lawsuit against Musk for market manipulation and insider trading, although the case was dismissed in August 2024.
Why has dogecoin – a meme coin that was never meant to be taken seriously as an investment – experienced such extreme fluctuations in value?
We’re all in this together
Dogecoin was launched in 2013 to usurp bitcoin and a host of other cryptocurrencies that claimed to disrupt the traditional world of finance. Two strangers from around the world met onlinecopied the code from an existing coin and marked it with the already popular Doge internet meme – a photo of a Shiba Inu dog surrounded by fragments of broken English: “wow much coin”.
Although their main goal was to manufacture the part useless and unwanted, it has become one of the most popular and longest-lived cryptocurrencies on the market.
Following dogecoin’s previous surge in 2021, I studied how his fervent network of influencers and everyday investors worked together to attract enormous attention – and capital – to the currency of the joke.
Elon Musk’s 2021 appearance on “Saturday Night Live” caused the price of dogecoin to plummet.
To understand the appeal of these absurd investments, one must look at the time and energy that users invest in these networks and the rewards, both financial and social, that they get in return.
Meme pieces are collaborative enterprises. Members of these online communities have an economic interest in becoming avid promoters: as the value of dogecoin increases, their investments increase. But they also receive social validation from other coin investors when they inflate the coin.
In other words, behind every coin is a collective of strangers with a common mission to make more money.
Dogecoin and its imitators have been described by their leaders as crypto movements, shared trips And belonging to the community projects. Beyond the enhancement of assets with images with cultural resonance, whether it is a Shiba Inu Dog Or Pepe the frogSuccessful crypto businesses are characterized by complex trust networks. Trust technology. Trust its potential for future appreciation. And trust that those with power in the networks will not exploit the rest.
This loyalty is woven within a global network of users who collaborate around the clock to promote their coin and demonstrate their unwavering commitment to its success.
During periods of price appreciation, the collective buzzing with exaltation.
During price drops, community members mutually reinforce their comrades’ belief – and their own – that this is just a bump in the road and that their collective efforts will eventually lead to great results. rewards. Even in the coldest temperatures crypto wintersthis ritual behavior helps these speculative communities to persist. Community serves as a substitute for financial loss.
Strategies for investing in these communities – and believing in their profitability – involve repeating and reposting what others have said, like any traditional Internet meme.
Traditional valuation lagging behind
The true value of meme coins cannot be understood in the same way as that of traditional assets, such as stocks and physical commodities. These types of assets have fundamentals, such as a company’s financial statements, or public demand for commodities, from coffee to oil.
Conversely, the fundamentals of meme coins are reflected in their network activity, such as daily active users, and in less concrete metrics, like social sentiment and mind sharing – how much public awareness a coin has generated compared to its rivals.
Of course, traditional asset valuations are also affected by these social factors. The difference is that meme coins offer little productive activity. They contribute nothing to the economy. Sometimes their leaders build financial services around thembut these are usually added after the fact, notably to generate more speculative enthusiasm.
Meme coins swap traditional valuation conventions and mock the edicts and dogmas of traditional investors.
And that’s exactly the point.
Participating in coin communities – or any crypto community, for that matter – involves adopting an alternative economic experience. These are speculative sandboxes allowing you to play outside the conventional rules of investing.
Who let the Doge out?
Musk is the quintessential coin influencer.
As the world’s richest man, he is considered by many to be a model of savvy investing. Its massive following extends well beyond the dogecoin social network. And its promotional efforts are playful — so playful that the judge in his class-action case rejected his dogecoin tweets as mere “bloat” and that “no reasonable investor could rely on them”.
Dogecoin had already reached the peak of its memetic momentum when Musk appeared on “Saturday Night Live.” Now, instead of sitting in the Weekend Update news desk making jokes, he’s sitting in Trump’s office advising the president-elect. In other words, dogecoin’s memetic resonance has moved from pop culture to politics, helping it capture a larger share of the public mind.
While dogecoin has specifically benefited from Musk’s proximity to Trump, the broader crypto market is surging with optimism about a crypto-friendly administration. Speaking at the Bitcoin 2024 conference in July, the GOP candidate assured he would make the U.S. “the crypto capital of the planet.” After pouring $131 million in this election cycleThe crypto industry can now claim 274 pro-crypto members in the US House of Representatives and 20 pro-crypto US senators.
Between Musk and Trump and a changing regulatory environment, the dog can run free again.
Maximilian Brichta is a doctoral student in communication at the University University of Southern California. This article is republished from The conversation under Creative Commons license. Read the original article.