Dogecoin notched double-digit gains earlier this week after the surprise move by Twitter.
Dreamstime
Dogecoin,
the major cryptocurrency largely based on a meme, was paring gains on Wednesday after a big spike, but the factors that pushed prices higher earlier this week—support from Elon Musk—remain in place. The memecoin rally could continue.
The price of Dogecoin slipped 3% over the past 24 hours after surging some 30% on Tuesday after Twitter—owned by Elon Musk, a high-profile fan of crypto and the memecoin in particular—changed its homepage logo to a Shiba Inu dog. Dogecoin was inspired by an internet meme involving a Shiba Inu dog—called “doge”—and is visually represented by the breed.
The move by Musk’s Twitter was read as explicit support for Dogecoin, which has vastly outperformed Bitcoin and other digital assets in recent days and now stands as the eighth-largest crypto by market capitalization. Dogecoin has a history of rising and falling on the whims of Musk, who has toyed with its price through the years on Twitter and references on television.
But this rally is also based on material factors—or at least rational hopes of material factors.
Musk added
Bitcoin
to the treasury of
Tesla
(ticker: TSLA)—which he runs as CEO—and while doing the same at Twitter would be another vote of confidence for crypto, he’s unlikely to follow suit with Dogecoin. The digital asset is extremely volatile, even relative to Bitcoin.
Rather, the key pro-doge move Musk could make is expanding Twitter as a payments platform to include more digital assets. Twitter released a tipping function in 2021 that allows users to pay content creators in Bitcoin, and Dogecoin fans will be hoping that the meme crypto could have a similar function. The fact that Tesla began accepting Dogecoin for some merchandise purchases last year helps bolster those hopes.
So far though, there are few signs that digital assets or Dogecoin will play a larger role at Twitter—with indications that the crypto push has even lost steam.
There is another bull case for Dogecoin, which is using the token in cracking down on spam bots—one of Musk’s key gripes with the social media platform he purchased last year. Musk has discussed the possibility of requiring users to pay a negligible fee—even a fraction of a penny—for the right to comment or repost a comment. Those fees could be paid in Doge. Even imposing that small cost could filter out the bots, and funnel massive trading volumes to the crypto.
While Dogecoin prices have shed some of their earlier gains, traders bullish on the memecoin will be able to continue holding the faith as long as the crypto remains the logo of Twitter and in front of the eyeballs of its hundreds of millions of users.
Write to Jack Denton at [email protected]
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