Space X and Tesla CEO, Elon Musk, has always believed in the capacity of cryptocurrencies to replace paper money in the future. He is active on Twitter as crypto enthusiasts watch out for his next tweet that could affect the price of Bitcoin and the popular meme coin, Dogecoin. Musk’s tweets, whether people like them or not, are admittedly influencing the behavior of cryptocurrency investors and the market itself. 

Tesla and Bitcoin

The forward-thinking tech billionaire previously called Bitcoin as “a brilliant thing” and declared he’d want to buy Ethereum even if people said it was a scam when it first came out.  On Twitter, Musk has talked about Bitcoin and other cryptocurrencies like Doge and Ethereum (ETH), causing a price surge with both coins. Since Tesla’s investment of $1.5 billion in Bitcoin, the company’s share price is now tied to the price of the cryptocurrency.  Tesla has previously made known its major Bitcoin investment in a filing with the Securities and Exchange Commission to have “more flexibility to further diversify and maximize returns” on the company’s cash reserves. 

The company also announced it will now be accepting Bitcoin as payment for its products. Tesla is the first automobile manufacturer to make such a move. Since the company holds $1.5 billion worth of Bitcoin, it will give Tesla the liquidity it needs once customers pay with the cryptocurrency. However, in May, Tesla announced it will suspend its acceptance of Bitcoin, citing environmental concerns of Bitcoin mining. 

Tesla’s Bitcoin purchase is a major percentage of its total cash. According to the company’s recent filing, Tesla had more than $19 billion in cash and its equivalents by the end of 2020. Bitcoin fans have been ecstatic about Tesla’s big news as the cryptocurrency rose by as much as 20% in the market. 

The rise of Dogecoin

In a tweet in April 2019, Musk said that the meme-inspired cryptocurrency Dogecoin was his “favorite” and thought it was “pretty cool.”  This excited crypto enthusiasts who were watching the digital coin’s movement since it’s appearance in 2013. The tech mogul responded to a poll initiated by Dogecoin’s official account on Twitter. Musk, who is also the world’s second wealthiest person, was one of the listed candidates for CEO in the poll asking for a possible CEO for Dogecoin.  Twitterverse unanimously chose Musk who got 54.4% of the votes.

After winning Dogecoin’s Twitter poll as the CEO, he wrote “CEO of Dogecoin” in his Twitter bio and shared a photo of a Shiba Inu dog captioned as “Dogecoin Rulz.” 

Meme turned token

Dogecoin creators, Billy Markus and Jackson Palmer, were inspired by the popular “Doge” meme in 2013 and issued the coin as a joke in December of that year. The meme-inspired cryptocurrency had a trading value of $0.0005 with a maximum of 100 billion coins that can be mined.  

What began as a joke has transformed into a legitimate cryptocurrency as more people began buying Dogecoin.  The digital coin gained popularity in different online communities like Reddit.  The coin’s total market value after Musk’s tweet has increased to almost 600 percent or $400 million. 

Elon Musk’s tweets spur movement

Last February 2021, Musk again tweeted about Dogecoin regarding the cryptocurrency being “underestimated.”  In another tweet, he shared a photo of a fictional magazine cover named “Dogue” that propelled the price of Dogecoin to 800%. Musk continues to tweet Dogecoin memes and branded the cryptocurrency as “the people’s crypto.”

The price of Dogecoin went up 600% since the last week of January this year. The coin’s developers are now scrambling to upgrade its outdated software. The latest Dogecoin tweet has put the spotlight back on the cryptocurrency.  

Lead developer, Ross Nicoll, told Coindesk about wanting to maintain the operations of Dogecoin. It was last updated back in June 2019 and with other developers assisting Nicoll, Dogecoin is scheduled for a much-needed update to address the coin’s issues with security and scalability.  Nicoll gave assurances that they will always keep security as their first priority.  

Dogecoin’s price soard to almost $0.10 in early February from $0.01 at the start of 2021. Since its peak, the cryptocurrency’s price fell by almost half despite Musk’s regular posts about Dogecoin to his 48 million followers.

Musk’s latest Dogecoin tweet failed to give flight to Dogecoin’s price as the coin is now down 40% from its previous highs. The Tesla CEO shared an image of a Shiba Inu on the moon, which could be interpreted as Dogecoin’s price “mooning”. This means the price will “go to the moon” in crypto lingo. Despite the tweet, the market response to Dogecoin remains muted as reflected on its price.  

Regulator fears 

Forbes reports that U.S. regulators are now investigating Musk and his Dogecoin tweets, suggesting his posts were directly responsible for the price boosts. The investigation was sparked by a financial markets newsdesk, First Squawk, when it posted on its Twitter account that the SEC will be looking into Musk and his Dogecoin tweets. It then cited “sources familiar with the matter” to its claims.  

Musk is apparently not concerned about the matter and even tweeted that he was hopeful regulators will investigate him. He added it would be “awesome” with laughing emojis. 

SNL appearance

Days before Musk’s appearance on Saturday Night Live (SNL), Dogecoin went up to as high as $0.70 and made some investors overnight crypto millionaires.  However, the price dropped to as much as 29.5% and dipped to $0.49 at some point. 

Musk mentioned Dogecoin during his opening monologue in SNL. In a Q&A with the show’s hosts Michael Che and Colin Jost, Musk referred to himself as the “Dogefather” and mentioned the coin as a “hustle.” He also howled “to the moon” which is a popular catchphrase among Dogecoin supporters wanting to drive the value of the coin to $1. 

During Musk’s “Weekend Update” skit, the price of Dogecoin began to go up again at 57 cents.  While SNL was ongoing, some cryptocurrency traders complained about outages in crypto exchanges like Robinhood. Fans of Dogecoin were on Twitter while the show was going on and some even held livestreams on YouTube while monitoring the value of the coin at the same time. 

Bitcoin price crash

Cryptocurrency investors are all waiting on the market as of this writing as after Musk, China and regulation fears have sent Bitcoin, Ether, Dogecoin and other tokens plunging in the past week. Following all-time highs came a deep price correction that has wiped out billions in the cryptocurrency market. 

Bitcoin and even Dogecoin have been struggling to return to their previously high values recorded in April with prices moving like a yoyo in recent days. On May 24, the price of Dogecoin plunged to $0.24 before recovering at its current value of $0.31.

In response to a tweet claiming that Musk is the “ultimate hodler” and won’t sell his Dogecoin anytime soon, the Tesla CEO said “Yeah, I haven’t and won’t sell any Doge.” Musk’s tweets about cryptocurrencies on Twitter have caused prices to rise and fall. 

Race to $1 a possibility

The creators of Dogecoin, Billy Markus and Jackson Palmer, believe in the potential of Dogecoin to reach $1. However, they said the cryptocurrency market will ultimately decide the price. 

The one-dollar value has long been the target of Dogecoin fans on Reddit and they see it as only a matter of time before the token will reach the goal price. In an email to Newsweek, Markus said if the world decides that they are willing to buy Dogecoin for a dollar then “it’s worth a dollar.” He added that the question to be asked should be “why not?” instead of “why” in the world of cryptocurrencies. 

While Dogecoin founders and the coin’s growing community are highly optimistic, others say it was still “unlikely” for the coin to reach $1. Jason Potts, economics professor and co-director of the Blockchain Innovation Hub at Australia’s Royal Melbourne Institute of Technology (RMIT) said he would be “surprised” to see the price reach the $1 level because Dogecoin has no supply cap unlike Bitcoin. 

However, Potts acknowledged that it was not an impossible feat for Dogecoin. He echoed Markus in saying that ultimately, it is up to the buyers and sellers to determine the value of the cryptocurrency. 

Potts believes that if ever Dogecoin will hit $1, it would trigger a “huge wall of selling” and increase supply. This will also cause prices to go back down since this is how markets are supposed to work. He said it was unlikely that the token would be considered stable but it could become a “niche currency” for purposes like monetizing “likes” on social media. 

Compared to previous years, Dogecoin’s popularity cannot be dismissed as more developers and investors are now taking the cryptocurrency more seriously.  What does this mean for the future of Dogecoin and more importantly, will the cryptocurrency market be swayed by Elon Musk again? Only time can tell.