Twitter is a powerful tool for moving cryptocurrency prices. At least, it is if you’re Elon Musk.
Its’s price jumped more than 10% at one point last Friday after the Tesla CEO tweeted that Tesla merchandise can now be bought with the meme coin.
Why Elon Musk Can’t Save Dogecoin Price: This wasn’t the first time Musk’s words have moved Dogecoin’s price. His comment on Twitter in July that a Dogecoin update could give it an edge over popular cryptocurrencies Bitcoin and Ether, and Musk’s post of a meme in April, also sent the meme coin’s price surging. And of course, there was that Saturday Night Live performance when the cryptocurrency’s price plummeted after Musk called it a “hustle.”
Musk’s company has become a cult stock, and when the billionaire makes moves like consulting his Twitter followers about whether or not he should sell 10% of his Tesla shares, it gets everyone talking on social media. So it’s not surprising that he has outsized influence in the crypto community as well.
- Dogecoin faces restricted real-world utility and competitors from different meme cash.
- Elon Musk’s promotional exercise cannot cease the asset’s relentless decline.
- Musk, who is the founder of Tesla and SpaceX, said he would eat a Happy Meal on TV if Fast food giant McDonald’s starts accepting Dogecoin.
But What Does The Market’s Reaction To Musk’s Every Word Say About These Crypto Investments?
“The volatility of meme coins and their vulnerability to gratuitous tweets make them a dangerous place for investors,” James Angel, a finance professor at Georgetown University, told Money via email. They are not investments in projects that yield predictable cash flows, he adds. “They are speculative games of musical chairs.”
The fact that Musk can tweet one thing and send Dogecoin’s price up or down is evidence that the meme cryptocurrency is a more risky and volatile asset than cryptocurrencies like Bitcoin, says Hanna Halaburda, an associate professor at NYU Stern School of Business.
In general, currencies derive their value from the expectation that someone else will accept the currency in a transaction or buy it at the same or a higher price. Traditional currencies, like the dollar, can have their values impacted by inflation or moves by central banks. But with cryptocurrency, there isn’t an underlying value with price moves we can predict in the same way, Halaburda says.
“They are even more than any other asset reliant purely on the beliefs of the market,” she adds.
Those beliefs can be impacted a lot by a trivial element, like a seemingly off-the-cuff tweet from Musk blasted out in the early hours of the morning.
Musk’s comments have been known to move the price of Bitcoin as well, like when he tweeted that Tesla would no longer accept Bitcoin last May. But meme coins, like Dogecoin and Shiba Inu, are even riskier than more popular cryptocurrencies like Bitcoin and Ether, which have way more investors involved, Halaburda says.
Bitcoin has a market value of nearly $800 billion. It continues to be accepted by more companies as payment and can even now be bought at Walmart. Meanwhile, Ethereum, the network that Ether runs on, has more of a purpose, some experts argue, as it’s a platform that allows for financial transactions to be verified and stored without a third party like a bank.
Dogecoin has no attributes like those, Halaburda adds. Either you trade it or you don’t.
“It’s much more difficult for a single person or even a few to affect the price of Bitcoin as much as the price of Dogecoin,” she says. “And that makes Dogecoin much more volatile.”
Here Are 2 Reason Why Elon Musk Can’t Save Dogecoin Price
Tesla‘s CEO Elon Musk introduced that he would eat a McDonald’s Happy Meal on TV if the restaurant chain accepted Dogecoin (CRYPTO: DOGE) as a cost. The tweet is the most recent of the billionaire’s many attempts to affect the Dogecoin value, and it despatched the belongings valuation up 8% just a few hours earlier than these positive aspects have been promptly erased.
While Elon Musk has historically influenced cryptocurrency markets, his energy appears to be waning as buyers begin prioritizing fundamentals over baseless hype. Let’s discover why Elon Musk cannot cease Dogecoin’s relentless crash.
1. Is Dogecoin Faces Competitors From Different Meme Cash
Cryptocurrency prices are slumping, with the market’s whole valuation down 45% from its peak of $2.9 trillion reached in early November. But Dogecoin’s bother began a lot ahead of that. The asset reached its all-time excessive of $0.74 in May and is now down by a jaw-dropping 81% to $0.14 at writing.
Dogecoin is not the only meme coin in the town. And Musk’s attempts to put it on the market have spawned one other technology of copycat belongings fastidiously designed to mimic its branding (the Shiba Inu breed of canine) and profit from Musk-related hype. When Musk tweeted, “My Shiba Inu pet might be named Floki” in June (a comment presumably meant to pump Dogecoin), rival Shiba Inu token soared as an alternative — rising by over 60,000,000% by late October, by CNN.
Shiba Inu additionally presents expanded performance in comparison with Dogecoin. And as an Ethereum-based asset, it’s programmable, with builders claiming to be engaged on a metaverse idea referred to as Shiberse to supply an “immersive expertise” for its customers.
2. Dogecoin Is A Poor Retailer Of Worth
Dogecoin’s issues do not cease with its restricted use cases. The coin additionally has some troubling options that forestall it from functioning properly as a retailer of worth. According to coinmarketcap.com, the availability of Dogecoin at present stands at roughly 133 billion and is designed to extend by 5 billion yearly — without end. Musk believes inflation is nice as a result it “encourages folks to spend.” But it is unhealthy information for buyers.
While cryptocurrency is gaining mainstream acceptance, it’s not broadly utilized in commerce due to volatility. Accepting Dogecoin would expose retailers to excessive change price threats. And whereas some might be keen to tolerate this uncertainty in a bull market, it turns into an uncooked deal when costs are collapsing. With that in thought, It’s fairly clear why McDonald’s hasn’t taken Musk up on his provide to just accept Dogecoin.
Bet on fundamentals, not hype:- Dogecoin forecast demonstrates how unsustainable hype is for propping up asset value valuations. While Musk’s pumping was initially very efficient, it’s now falling flat as cryptocurrency market sentiment sours and buyers prioritize fundamentals. Dogecoin was the primary common meme coin, however, competitors and poor fundamentals have despatched it to the doghouse.
Frequently Asked Questions – (FAQ’s)
Will Dogecoin get to $1?
CEO Elon Musk. Here are the total outcomes from this week’s survey: Yes, Dogecoin will attain $1 by 2023: 60.3% No, Dogecoin won’t attain $1 by 2023: 39.7percent15
Will Elon Musk buy Dogecoin?
Tesla, the electric carmaker headed by billionaire Elon Musk, has started to allow people to buy brand merchandise using Dogecoin, a cryptocurrency initially started as a joke. Mr. Musk announced the development on Twitter, a month after hinting at the plans.
Where can I spend Dogecoin?
The Dallas Mavericks, AirBaltic, BOTS, Inc., Post Oak Motor Cars, Newegg, and so forth., are a few of the well-known corporations which have begun accepting DOGE funds.
How can I buy Dogecoin?
If you want to purchase Dogecoin in India you will have to arrange your account on crypto exchanges that help Dogecoin. WazirX is one such platform that enables its customers to purchase, promote or commerce in Dogecoin.