Dogecoin falls, but Elon Musk means the Memecoin rally can continue
Dogecoin,
he major cryptocurrency based largely on a meme was on the rise on Wednesday after a big rally, but the factors that pushed prices up earlier this week – support from Elon Musk – remain in place. The memecoin rally could continue.
The price of Dogecoin fell 3% in the last 24 hours after rising around 30% on Tuesday after Twitter – owned by Elon Musk, a high-profile fan of crypto and memecoin in particular – changed its homepage logo to a Shiba Inu dog. Dogecoin was inspired by an internet meme involving a Shiba Inu dog – called “doge” – and is visually represented by the breed.
The move from Musk’s Twitter was read as explicit support for Dogecoin, which has outperformed Bitcoin and other digital assets in recent days and now stands as the eighth largest crypto by market capitalization. Dogecoin has a history of rising and falling at the whims of Musk, who has toyed with the price over the years on Twitter and references on TV.
But this encounter is also based on material factors – or at least rational hopes for material factors.
Musk added
Bitcoin
to the coffers of Tesla (ticker: TSLA) — which he runs as CEO — and while doing the same on Twitter would be another vote of confidence for crypto, he̵[ads1]7;s unlikely to follow suit with Dogecoin. The digital asset is extremely volatile, even compared to Bitcoin.
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Rather, the most important pro-dog move Musk can make is expanding Twitter as a payments platform to include more digital assets. Twitter launched a tipping feature in 2021 that allows users to pay content creators in Bitcoin, and Dogecoin fans will be hoping the meme crypt can have a similar feature. The fact that Tesla began accepting Dogecoin for some merchandise purchases last year helps bolster those hopes.
So far, however, there are few signs that digital assets or Dogecoin will play a bigger role on Twitter – with indications that the crypto push has even lost steam.
It’s another bull case for Dogecoin, which uses the token to crack down on spambots — one of Musk’s key moves with the social media platform he bought last year. Musk has discussed the possibility of requiring users to pay an insignificant fee — even a fraction of a penny — for the right to comment or repost a comment. These fees can be paid in Doge. Even imposing that small fee can filter out the bots, funneling huge trading volumes to the crypto.
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While Dogecoin prices have lost some of their previous gains, traders bullish on the memecoin will be able to keep the faith as long as the crypto remains the logo of Twitter and in front of the eyeballs of its hundreds of millions of users.
Write to Jack Denton at jack.denton@barrons.com
