Published: December 21st, 2022
Dogecoin’s (DOGE) proce fell by more than 10 per cent this week after newly-installed Twitter CEO Elon Musk shared a poll asking if he should step down from the chief executive role.
The response was resoundingly negative, with roughly 59 per cent voting for his departure. DOGE, one of Musk’s pet enthusiasms immediately started losing value. It added to the pounding crypto markets have taken recently due to fears of a recession and the widening fallout from the collapse of crypto exchange FTX.
Both traditional and crypto financial markets are feeling the heat. Bitcoin and Ethereum have both fallen this week, while the Dow Jones Industrial Average, NASDAQ, and S&P 500 all started the week down one to two percent. For the major stock indices, it was the fourth straight day of hovering at six-week lows.
DOGE had been on a different path as its price rose after Musk bought Twitter in October. When Musk officially purchased Twitter on 27 October DOGE's price was USD 0.07. By 1st November it had doubled to USD 0.14. It's been on a see-saw ride ever since.
That’s still a far cry from its May 2021 all-time high of USD 0.72. That happened when Musk appeared on US comedy show Saturday Night Live. Since then, it's lost over 83 per cent of its value.
DOGE was originally launched as a joke in 2013 by developer Jackson Palmer and established itself as the first ‘meme-coin.’ Markets didn’t take it seriously until Musk began to tout its utility. Despite Musk's support, his company Tesla has yet to invest in DOGE, restricting its crypto holdings to USD 217 million in Bitcoin.
With the arrival of Elon Musk as Twitter’s new owner, DOGE saw its fortunes rise again. It experienced an extended rally immediately after the acquisition, doubling in value for a brief period to nearly (USD) 15 cents on Monday 31st October.
Musk’s outsized influence on DOGE’s price isn't a new phenomenon. Its last Musk-driven price spike saw it shoot out of the year’s crypto bear market to reach prices not seen since April of 2022. Musk was initially quiet about Dogecoin when he completed his USD 44 billion purchase of Twitter, but he has since started responding to tweets from Billy Markus, one of Dogecoins developers, regularly on the social network.
After the Twitter buyout, CoinGecko tracked Dogecoin’s total value at around USD 15.8 billion, up from USD 8 billion and pushing it past the market cap of more ‘legitimate’ coins like Solana and Cardano. At time of writing it was holding its position as the eighth largest crypto by market cap.
The coin also saw heavy trading on the major cryptocurrency exchanges, with volumes of over USD 300 million conducted between Monday 31st October and Tuesday 1st November 2022. On Coinbase DOGE is currently the 9th most traded coin. On 1st November it accounted for over 14 per cent of the exchange’s total trading volume.
Trades on Binance, trades between DOGE and stablecoin Tether amounted to USD 1.8 billion in the same period, totaling 10 per cent of the exchange’s total trading volume. Exchanges between DOGE and Binance’s own native token Binance USD, exceeded USD 900 million, or north of five per cent of the exchange’s total trading volume.
DOGE’s rise in popularity over the past 12-18 months is partly down to Musk’s multi-year attachment to the token. He’s referenced it many times on Twitter and even adopted it as a payment method for some Tesla products and services.
Despite the price spike seen this week, Dogecoin is still down 83 per cent from the all-time high of 72 cents reached in April of 2021, coincidentally the very same day that Musk was guest host of Saturday Night Live, the hugely popular US comedy programme.
After Musk’s appearance the coin plummeted by 35 per cent. During one of the show’s comedy segments, Musk said Dogecoin was ‘the future of currency,’ but in another comedy segment he said it was ‘clearly a scam’.
It’s not even the first time this year that DOGE has been impacted by Musk’s Twitter fascination. In February its price jumped by 25 per cent when he first announced his intention to buy the social network. Bitcoin and Ethereum were unaffected by the news.
DOGE’s price has moved in tandem with many of Musk’s crypto-related tweets over the past year or so. His frequent references to the coin have been credited with elevating DOGE to its current top-ten ranking.
The possibility of Musk taking control of the popular social media platform had crypto enthusiasts buzzing for months, with Dogecoin’s Marcus tweeting ‘Can Mr. Musk please purchase the SEC now?’ in a thinly-veiled criticism of the regulator’s foot dragging over approval for a Bitcoin spot exchange traded fund (ETF).
Musk’s purchase of the notoriously money-losing Twitter looks to be driven by his convictions about free speech and censorship. In the aftermath of the Trump/Russia-gate political scandal, worries about COVID disinformation, and the banning or de-platforming of Russian ‘state affiliated media’ outlets following the invasion of Ukraine, there have been concerns that about abuse of Twitter as a medium for shaping US public opinion.
He has hailed Twitter for its potential to become 'the internet’s public square’, but has also said the firm’s publicly-traded status was a barrier.
You can use DOGE to buy Tesla merchandise on the carmaker’s website, while Musk’s public transit firm The Boring Company will take the crypto as a form of payment on its Las Vegas Loop. In May, Musk also toyed with the idea of letting Twitter users pay in DOGE for its Twitter Blue premium subscription service. There is speculation in the technology press that the move could still happen.