Tesla CEO Elon Musk’s tweets have been impacting cryptocurrencies. Bitcoin and Dogecoin are the two crypto assets that Musk has been tweeting about. Musk had a sort of breakup with Bitcoin in May but seems to be embracing it again. What’s the forecast for Dogecoin as Musk flips between different cryptoassets?
Musk has had a love-hate relationship with Bitcoin. In the first quarter of 2021, Tesla invested $1.5 billion in Bitcoin and became the biggest corporate backer of the cryptocurrency. Later, Tesla started to accept Bitcoins as payment and said that it wouldn't convert Bitcoins into dollars.
Musk and Bitcoin: A troubled history
In May, Musk said that Tesla would stop accepting Bitcoins as a payment citing the increasing fossil fuel intensity of Bitcoin mining. However, he also clarified that Tesla wouldn’t be selling the Bitcoins that it held.
Since Tesla is the biggest mascot of the green energy and electric vehicle industry, the company (rightly) doesn't want to be associated with anything that's seen as damaging to the environment. Musk also quit Trump’s economic council after he withdrew from the Paris Climate Deal.
It’s a separate matter altogether that the energy intensity of Bitcoins and Trump’s views of fossil fuels were known much in advance. However, Musk went ahead and associated himself with Trump as well as Bitcoins.
Musk might be having a change of heart on Bitcoin.
Musk seems to be having a change of heart on bitcoins and has said that the company will again start transacting in them “When there’s confirmation of reasonable (~50 percent) clean energy usage by miners with positive future trend.”
Will the “dogefather” dump Dogecoin?
Previously, Musk said that he's working with the Dogecoin development team to increase the energy efficiency of the meme cryptocurrency. Musk started to accept Dogecoin as payments on his privately held SpaceX and also held a Twitter poll about whether Tesla should start accepting the crypto. While the response was overwhelmingly in favor of Tesla accepting Dogecoin, the company hasn’t made a decision yet.
While Musk is among the most visible backers of Dogecoin and is the self-proclaimed “dogefather,” he called the crypto a “hustle.” Dogecoin, which started as a joke, slumped after Musk’s comments.
With a market capitalization of over $40 billion, Dogecoin isn't a “joke” anymore. Now, it's among the top 10 crypto assets by market capitalization. Dogecoin prices are up sharply in 2021 amid backing from celebrities like Musk and Mark Cuban.
Dogecoin's forecast as Musk warms up to Bitcoin
From a fundamental perspective, Dogecoin prices could come under pressure if Musk continues to warm up to Bitcoin. The Thai securities regulator has banned meme tokens. While the release hasn’t named any particular crypto asset, Dogecoin and Shibu Inu are the two most prominent meme crypto tokens.
Based on the technical indicators, Dogecoin isn't looking very attractive on the charts. After having more than halved from its highs, Dogecoin trades below its short-term moving averages like the 10-day SMA (simple moving average), 30-day SMA, and 50-day SMA. However, it trades above the 100-day SMA and 200-day SMA. The 14-day RSI (relative strength index) is at 44.8, which is also a neutral indicator.
The short-term forecast for Dogecoin looks bearish. Also, in the long term, it would need an endorsement from several other companies and celebrities before getting almost mainstreamed like Bitcoin.