SINGAPORE, Nov 8 (Reuters) – No kidding. The acquisition of Twitter by Elon Musk has put a fresh wind in the sails of dogecoin, the meme cryptocurrency that catapulted it to fame.
Dogecoin’s price doubled after the Tesla mogul completed the $44 billion deal. It was trading at around $0.07 on Oct. 27 before Musk tweeted “the bird is free” to announce his ownership. Five days later, it was down to $0.16.
That may not sound like much, but it gave the highly volatile cryptocurrency a market value of $21 billion, according to data platform CoinGecko.
Not bad for a coin that was created as a “joke” lampooning wild speculation in the cryptocurrency market and named after an internet meme of a Shiba Inu dog.
“Dogecoin trading around Elon’s tweets has become a lucrative form of speculation,” said Matthew Dibb, chief operating officer of Singapore-based crypto investment manager Stack Funds.
Indeed, Musk has played a major role in the rise of dogecoin since its joyful launch by two software engineers in 2013. His tweets expressing support for the coin, including one calling it the “people’s cryptocurrency,” helped. for its price to appear almost out of nowhere to increase. about 4,000% in 2021.
Crypto watchers said the latest price increase, following the Twitter deal, was fueled by investor bets that Musk would make Doge part of the platform’s payments system.
“There is a lot of speculation that Twitter will provide a testbed for doge adoption and experimentation for different uses,” Dibb added.
DOGO AND SIB
Dogecoin has since lost some of its gains and hovers around $0.12, making it the eighth largest cryptocurrency, with a market capitalization of around $16 billion, according to CoinGecko.
[1/2] Representations of the virtual currency Dogecoin are seen in this illustration taken on June 16, 2021. REUTERS/Dado Ruvic
The so-called meme coin hit a high of $0.63 in May last year, but macro gloom and investor apathy towards venture markets have since crushed it along with other prominent crypto assets like bitcoin and ether. Even after the latest rally, Doge is down 57% in the last 12 months.
Nonetheless, crypto market news website Coindesk said that its doubling in price had made Doge the best performer among 150 digital assets in its CoinDesk market index in October.
According to CoinMarketCap, its share of the $1 trillion global crypto market capitalization for the year to the end of October was 1%, a fraction of bitcoin’s 39%. Now it is at 1.58%.
Doge has raised other dog-themed coins in its wake, most notably the Shiba Inu, which has the same Japanese dog breed motif as Doge and is designed to be compatible on the Ethereum blockchain. Shib, trading at just $0.00001, jumped a third in the days after Musk closed the Twitter deal.
Unlike bitcoin, both doge and shib have nearly unlimited supplies, meaning it would take more than mere speculative hoarding to drive their prices higher.
A MERCY OF MUSK?
Bets that Musk could allow crypto payments with dog tokens were ignited by his tweet last week of a photo of the Shiba Inu dog in a Twitter t-shirt.
However, the initial rally has stalled, with many crypto investors stumped as to how serious he really is about dogecoin.
Musk, the world’s richest person, called dogecoin a “hustle” on a talk show in May last year, for example, causing the price to plummet.
Then, in January of this year, Tesla began accepting dogecoin as payment for its merchandise, such as “Giga Texas” belt buckles and mini-model electric vehicles.
Musk’s newly released perfume, “Burnt Hair,” can also be purchased with doge.
Information from Vidya Ranganathan; Edited by Pravin Char
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