Tesla CEO Elon Musk pictured in Austin, Texas on April 7, 2022. The electric vehicle company has also been making inroads into battery storage.
Suzanne Cordeiro | AFP | Getty Images
Dogecoincryptocurrency tagged after viral dog meme from 2013, is up 35% since Monday as deal to buy Elon Musk Twitter approaches a fence.
The price of the token often moves in parallel with the comments made by the You’re here CEO. Doge is up 10% in the past 24 hours after the SpaceX chief changed his Twitter bio to “Chief of Twit” on Wednesday. Similarly, the meme token saw a price spike in April when Musk first floated the idea of adding dogecoin as a payment method for Twitter’s Blue subscription service. It also saw a selloff in June as Musk tried to back out of buying.
But after a month-long battle between Musk and Twitter over the sale, all signs point to Musk closing the deal by Friday’s 5 p.m. deadline. The alternative is for Musk to stand trial in a Delaware courtroom.
The dogecoin price surge – pronounced “doje coin” with a soft “g” sound – also coincides with rumors that Twitter is in the process of prototyping its own crypto wallet.
Jane Manchun Wong, a popular tech blogger known for her prescient space calls, tweeted monday that Twitter “was working on a ‘prototype wallet’ that supports ‘crypto deposit and withdrawal’.”
“We don’t yet know what type of cryptocurrency will be supported, or what network,” Wong told CNBC.
Twitter hasn’t announced a cryptocurrency wallet product, but the social media company rolled out a toggle feature last year, which allows users to send bitcoins to creators through the platform. In February, Twitter added ether to its tips feature.
Introduce Elon Musk during the monologue on Saturday, May 8, 2021.
heath | NBCUniversal
The Elon Musk effect
It is not entirely clear when or why dogecoin captured the heart of Elon Musk. Billionaire Tesla and the CEO of SpaceX spent years speak token.
Musk’s tweets with sometimes oblique references to dogecoin often sent it to new all-time highs. These publications have also helped to arouse the interest of retail investors.
“You have this guy who looks a bit like the cult leader,” said Asheesh Birla, chief executive of Ripple, which runs an alternative cryptocurrency used for payments.
Musk, however, isn’t the only one to have celebrity endorsements of the animal brand token. Dallas Mavericks owner Mark Cuban, Snoop Dogg, and Kiss bassist Gene Simmons have all publicly rallied around dogecoin in the past. Even the Slim Jim brand of beef jerky stepped in at some point.
Doge’s 2021 price spike, attributed by one analyst to preparation for Musk’s appearance on “Saturday Night Live” on May 8, 2021, even managed to crash Robinhood trading app.
But there was more to dogecoin’s record price than just celebrity endorsements. There has also been a lingering sense of “sticking” to the establishment.
“Dogecoin is like this kind of big FU for the system,” said Avi Felman, head of trading at BlockTower Capital. “It’s like, ‘Yeah, this thing can be valuable too. And I’m just going to buy it, because I’m going to buy it.'”
“Elon is basically getting this message across, ‘Why can’t dogecoin have value? “” Felman said of Doge’s 2021 price hike. “People love these stories. They love these stories. They love these jokes. And dogecoin just captured the mind and imagination of every investor. Retail.”
“You have a rabid online community,” Birla said of the doge evangelical fan base.
In 2013, software engineers Billy Markus and Jackson Palmer launched the satirical cryptocurrency as a way to poke fun at bitcoin and the many other cryptocurrencies touting grand plans to take over the world.
“You have Twitter and Reddit, where they all come together and think about how to pump dogecoin,” Birla said.
Valuing dogecoin
Whether dogecoin has value is debatable.
Currently, there are very few use cases for the token. However more merchants started accepting dogecoin as a form of payment last year, it is nowhere near the level of adoption needed to be used as some sort of real currency substitute.
“Everything these days is just a big marketing ploy,” Mike Bucella, general partner at BlockTower Capital, previously told CNBC.
Unlike rival cryptocurrencies such as etherwhich allow programmers to build applications on their platform to do things like lend and borrow money, there is not much anyone can do with dogecoin.
Dogecoin isn’t really a reliable store of wealth either, given that it usually requires some degree of long-term trust in the coin and the blockchain it was built on.
“If you look at the dogecoin protocol itself, I don’t even know if there’s anyone over the last few years that has added new features or code to it,” Birla said. “Dogecoin doesn’t really have a development team behind it.”
Given these limitations, the surge in dogecoin appears to be purely speculative. Dogecoin is valuable because other people believe it is valuable – and because they believe someone else is willing to buy it at a higher price.
Disclosure: “Saturday Night Live” is a television show from NBCUniversal, CNBC’s parent company. CNBC has exclusive off-network cable rights to “Shark Tank,” which features Mark Cuban as a panelist.
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