Since news of Elon Musk’s Twitter takeover was announced last week, his favorite crypto Dogecoin has more than doubled in price. The Shiba Inu-branded token was launched as a joke by crypto-skeptic Jackson Palmer, yet it’s soared into the eighth biggest cryptocurrency by market cap — supported by Reddit community WallStreetBets and various superstars like Snoop Dogg, Mia Khalifa, and Mark Cuban.
The meteoric rise of Dogecoin came as an incredible plot twist to Palmer, who thinks that crypto is part of the grift economics of contemporary capitalism. Palmer would like crypto to die out, but could Dogecoin outlast the hype?
Its meteoric rise has to be seen in the context of last year’s speculative mania with meme stocks, which began with Gamestop. As the stock market regularly churned out new all-time highs, young people entered the market. They fueled an online craze in stocks through Reddit boards such as WallStreetBets. Soon, hordes of young retail buyers turned to crypto.
Gamestop, the flagship of the meme craze, is down -45% in the past year.
Judging by its history, Dogecoin may very well dump after the exuberance wanes, or maybe when Musk once again admits on live television that, for him, Dogecoin is just a “hustle.”
Dogecoin doesn’t have any use cases. Its only strength seems to be a very large online community spearheaded by influencers who believe in the coin with almost religious fervor. Yet, Musk’s Tesla accepts doge as a form of payment for its merchandise. Just this week, Musk seemed to suggest that the newly acquired Twitter could soon accept doge to pay $8 for a blue check symbol.
Dogecoin is similar to meme stocks in many respects — its survival hangs on the perseverance of its fans. However, Dogecoin has what many other meme assets do not: Elon Musk’s support. Tesla accepts doge for merchandise payments, which may encourage the prospect of Twitter embracing it. Along with Musk’s history of pumping it up, this may fuel speculation for Dogecoin.
However, capitulation by Elon Musk shouldn’t be ruled out either. Tesla sold 75% of its bitcoin and scrapped plans to accept it as payment thanks to price volatility.