This week’s increases are exacerbated after Elon Musk sealed a $44-billion deal last week to acquire Twitter. The Tesla Inc (TSLA.O) CEO, a vocal proponent of cryptocurrencies, has heavily influenced prices of dogecoin and bitcoin in recent months by advocating the benefits of the nascent technology through his social media accounts. Dogecoin is based on the same technology as bitcoin, called blockchain, which records transactions shared across a network of computers rather than one centralized database.
What is Dogecoin?
Dogecoin is a cryptocurrency based on the popular 2013 meme, Doge. The coin was created as an alternative to bitcoin for use as a tipping system on Reddit and has now become one of the most popular cryptocurrencies.
It is traded on various exchanges such as Binance, Poloniex, and Upbit.
Dogecoin surged more than 70% this past week after the Tesla Inc CEO, a vocal proponent of cryptocurrencies, sealed a $44-billion deal to take over Twitter last week.
The price of dogecoin has risen in tandem with that of bitcoin and other cryptocurrencies since then, outpacing gains made in recent months amid increased regulatory scrutiny around initial coin offerings (ICOs) and token sales.
Dogecoin surges on Elon Musk’s Twitter deal.
Dogecoin surged more than 70% on Saturday, extending this week’s gains and driving the cryptocurrency’s market value even higher.
The Tesla Inc (TSLA.O) CEO, a vocal proponent of cryptocurrencies, has heavily influenced prices of dogecoin and everything app, according to traders.
Elon Musk’s twitter deal is creating a lot of buzz in the market, said Misha Suvorov, founder and chief executive officer at the Robot Trading Company, which invests in bitcoin and other cryptocurrencies.
Every time he tweets about his position or his views on cryptocurrency prices go up.
The result is that everything app profits from Musk’s Twitter presence. On Monday, one day before shares of everything app rose above 1 billion for the first time ever, Musk tweeted: I’ve just gotten word that SpaceX was offered by Saudi Arabia to launch the SpaceX constellation satellite.
That tweet caused everything app shares to rise 7.5 percent within minutes.
Later that day when Musk tweeted again about how much he likes bitcoins, everybody scrambles for buy orders because they know Elon might start buying, Suvorov added.
He could also tweet something against it and sell off any crypto holdings he had, but nobody wants to find out the hard way if he decides to start dumping crypto holdings like Warren Buffet did back in January.
Not everyone agrees with Suvorov’s assessment of Musk’s influence on prices, however.
I think that people were reacting partly due to Elon’s comments, John Newbery, head trader at Cryptology, said via email but I don’t think there are too many serious investors who are trading based on what Elon says.
This is because while Elon may be influential in many areas, Bitcoin and Altcoins tend not to be very influenced by tweets and news events related to traditional stocks such as Tesla.
As such, while some of the surge may have been attributed to Musk’s personal interest in cryptocurrencies leading him to take a large stake in everything app through his own company OpenAI , the real driver appears to have been dogecoin miners cashing out en masse following bullish announcements.
Elaborating further, Peter Kim told Bloomberg that the amount of miner selling pressure increased significantly due to profit taking following a major announcement two weeks ago.
It seems as though everything app can thank its loyal army of dogecoin enthusiasts for driving up its value over recent days, and it remains unclear whether Musk will maintain an active role in influencing the cryptocurrency’s price moving forward.
What are dogecoin enthusiasts saying about this?
Elon Musk, who has more than 24 million followers on the site, spoke about the cryptocurrency on Friday.
Wanna buy some Dogecoin? he tweeted. Consider this a vote of confidence in the cryptocurrency community.
It is not clear whether Mr. Musk made his purchase after being asked by a follower or if he picked up a position earlier in the week, but he told Bloomberg that his dogecoin holdings are all gone now.
I just wanted to make sure I had skin in the game, he said .
I think it says something about crypto generally, when someone says something and their stock moves 20 percent.
What did traders say?: One trader speculated that this may be because Tesla investors are using Mr. Musk’s tweets as an opportunity to get out of TSLA before the company releases its first quarter earnings report on Wednesday which will be watched closely for signs of how the company is faring amid increased competition from European automakers. In any case,
the sharp gains come at a welcome time for many dogecoins holders; last week was tough with bitcoin plummeting below $8,000 again and most other cryptocurrencies posting losses of 5% or greater.
How much did it surge?
After Elon Musk sealed a $44-billion deal to buy Twitter, dogecoin soared over 70% on Saturday. The Tesla Inc (TSLA.O) CEO, a vocal proponent of cryptocurrencies, has heavily influenced prices of dogecoin and other cryptocurrencies with his comments in the past.
Dogecoin was created as a joke based on the popular Doge meme featuring a Shiba Inu dog and was initially used to tipping people online. At its peak price in January 2018, one coin was worth around $0.018.
In early 2019, it traded at around $0.0026 before dropping below $0.005 on Feb 5th, according to CoinMarketCap data.
But it has since jumped back up above $0.007 after Musk first tweeted about dogecoin back in December 2017: Looks like you can buy Dogecoins on Amazon now! he tweeted on Dec 20th 2017.
That tweet led to a 30% surge in the currency’s value within two days.
And the recent increase may be driven by speculation that Musk will use his influence to pump up prices again.
Two analysts from New York University, Madeline Schnapp and Aaron Brown told CNBC that Elon Musk could go wild with his tweets if he decides to invest in cryptocurrency.
People are worried if this is too good to be true, said Ernie Teo, who runs a cryptocurrency hedge fund called Quantech Ventures.
So they’re waiting for some news or an announcement.
What happened to bitcoin?
Yesterday, the bitcoin trading down 15% extending this week’s losses, which came following a $44-billion deal to take over Twitter last Monday.
Commenting on this, the owner of dogecoin and bitcoin Elon Musk had his heavy influence on bitcoin prices, not immediately available for comment when contacted by Reuters.
The deal could value Twitter at close to $27 billion, according to reports. It marks one of the largest technology deals on record with a total value topping Google’s purchase of Motorola Mobility LLC in 2011 ($12.5 billion).