Published: November 2nd, 2022
With the arrival of Elon Musk as Twitter’s new owner, Dogecoin once again sees its fortunes tied to the Tesla billionaire’s business dealings.
DOGE has been in an extended rally since the social media network’s purchase by one of the world’s richest men, doubling in value for a brief period to nearly (USD) 15 cents on Monday 31st October. At time of writing the price had fallen back somewhat to USD 0.01418 cents, which according to CoinGecko still leaves it up 94% over the past seven days.
Musk’s outsized influence on DOGE’s price isn't a new phenomenon, but the coin burst out of the current crypto market doldrums to reach prices not seen since April of 2022. Musk hasn't spoken about Dogecoin since he completed his USD 44 billion purchase of Twitter, but he has been responding to tweets from Billy Markus, one of Dogecoins developers, regularly on the social network.
Since last week CoinGecko has 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 the eighth largest crypto by market cap.
The coin has also seen heavy trading on the major cryptocurrency exchanges this week, with volumes of over USD 300 million conducted between Monday 31st October and Tuesday 1st November. On Coinbase DOGE is currently the third most traded coin, accounting 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.
Despite the rapid price spike seen this week, Dogecoin is still down 83 per cent from the all-time high of 73 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 referred to Dogecoin as ‘the future of currency,’ but in another he called it ‘a hustle.’
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.
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.
It’s not the first time DOGE has leapt suddenly on the back of Musk’s potential Twitter takeover. In February it jumped in price by 25 per cent when Musk first announced his intention to buy the social network. Bitcoin and Ethereum were unaffected by the news.
In fact, 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 a top-ten ranking of cryptocurrencies by market cap.
The possibility of Musk taking control of the popular social media platform has 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 appears to be motivated 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. Musk has hailed Twitter’s potential as a ‘platform for promoting free speech around the planet’, but has also said the firm’s publicly-traded status was a barrier.
In addition to taking Twitter private, Musk is also promising to democratise the platform and get rid of the ‘lords & peasants’ system of anointing some high-profile users with blue checks that certify their identity.
Hitching its fortunes to Musk has been a boon to Dogecoin's fortunes, but it’s worth remembering that it arrived on the scene as a sort if financial joke. DOGE’s founders built it to parody what they saw as the unhinged hyper-enthusiasm around Bitcoin as it rapidly rose to fame.
Pre-Musk, Dogecoin spent most of its existence worth less than a tenth of one US cent. Then in April of 2021, the Tesla CEO started touting DOGE’s transactional capabilities. The attention shifted DOGE's price past USD 0.73, prompting leading crypto exchanges to list it.
With its newfound popularity, DOGE’s price began to rise, and the coin began posting gains of between five and seven per cent. It’s moved steadily up the crypto charts ever since, though like most cryptocurrencies it’s seen its fortunes flag amid the wider crypto bear market that’s taken hold across most of 2022.
Following the lead of Coinbase, other exchanges have since added DOGE to their trading lists. The coin still sees the majority of its trading volume happen on Robinhood, where it's one of a limited number of cryptocurrencies listed by the firm.
Musk and Coinbase have handed DOGE much needed legitimacy, putting the meme-inspired coin on a potential path to mass adoption.