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Tweets from Musk send price of Dogecoin soaring

February 4, 2021

Prices of Dogecoin rose by 50% less than 24 hours after the world's richest man, Elon Musk, tweeted a meme of himself and the cryptocurrency's logo in Disney's The Lion King film.

Elon Musk | CEO | SpaceX und Tesla
Elon Musk, CEO of SpaceX and Tesla is also the world's richest manImage: Suzanne Cordeiro/TNS/abaca/picture alliance

With just a few tweets, Elon Musk has sparked a market run on a little-known cryptocurrency, Dogecoin.

According to the website Coinmarketcap.com, a cryptocurrency data provider, the price of Dogecoin rose by around 50% to $0.02610 (€0.022) on Thursday — up by almost 3 cents in less than 24 hours.

The volume of trading also more than tripled over the course of the day.

Musk, the world's richest man, head of electric car maker Tesla and spacecraft producing SpaceX company, had fueled the rise by simply posting the word "doge" on Twitter with a picture of a moon rocket.

He then wrote: "Dogecoin is the people's crypto[currency.]"

"No highs, no lows, only Doge," he added.

He also tweeted a meme of himself and dogecoin in Disney's Lion King film.

No laughing matter

The computer generated currency Dogecoin uses a Japanese shiba inu dog meme as its logo.

As reported by the Guardian, it was started in 2013 as a joke following the invention of Bitcoin which launched a wave of other competing cryptocurrencies.

Since then the joke has caught on. The coin had a market value of over $6.3 billion by Thursday morning according to Coinmarketcap.com.

What sets Dogecoin apart from other computer-derived currencies is that the number of digital coins that can be generated through "mining" is not limited.

In the generation process, users provide computing capacity for the encryption of transactions. Users are then paid in the corresponding cryptocurrency.

Decentralized encryption

Since the encryption of Dogecoin is simpler, transactions can be processed more quickly than with Bitcoin or Litecoin.

Dogecoin bills itself as a decentralized open source peer-to-peer digital currency that enables users to easily send money online.

However, analyst Timo Emden of Emden Research warned that it is not sustainable. "For investors the market environment with Dogecoin resembles going to the casino."

Bitcoin Illustration
Bitcoin has become the most valuable as well as best known CryptocurrencyImage: Nicolas Economou/NurPhoto/picture-alliance

Musk's influence

Musk is followed by over 45 million people on Twitter, but his social media influence is also boosted by his pop icon status.

Neil Wilson, chief analyst at online broker Markets.com, said "People are literally investing in him and his ideas." The contest of those ideas does not matter, according to the expert.

Though Musk vowed recently to take a break from Twitter, beyond making several online comments there that pumped up the value of Dogecoin, he recently sparked a rally around Bitcoin.

Its price rose above $38,000 last week after Musk changed his Twitter bio to include "#bitcoin."

By Thursday morning, its price had increased to over $38,741.

mb/dj (Reuters, Dpa)