With one tweet, Elon Musk has once again reignited conversations around Dogecoin. Notorious for building momentum earlier this year towards a meme coin worth less than a dollar, Musk provided as much entertainment for onlookers as those who were investing in Dogecoin.
On July 1, he tweeted, “Release the Doge!” Crypto investors were quick to gobble it up. In 15 hours, the tweet has garnered nearly 15,000 retweets and almost 110,000 comments. Will a Musk tweet save Dogecoin and the crypto market as a whole? Probably not, but let's take a look.
Dogecoin probably won't be propped up by Musk tweets alone.
The value of Dogecoin jumped sharply over 9 percent after Musk’s tweet. However, investors quickly sold off and the meme coin ended the day about where it started.
Musk’s tweet undoubtedly had an impact on Dogecoin, but that enthusiasm was already present in Dogecoin hodlers. If anything, his tweet might have slightly warmed the feelings of traditional investors to either enter the crypto space or hold their positions.
The long-term problem with Dogecoin is that it doesn’t have as many real-world use cases like bigger cryptocurrencies. For example, Ether works on the Ethereuem blockchain and is used to facilitate smart contracts. These smart contracts perform any digital command similar to how PayPal connects payers and payees and Uber connects drivers and passengers.
Dogecoin has long been driven solely by hype, memes, and tweets—hardly a solid strategy to base substantial investments on.
Looking at where Dogecoin is heading is pure speculation. Will Musk restart his Dogecoin Twitter campaign that helped it soar in early 2021? Will his absence cause Dogecoin’s value to decrease more? Dogecoin is truly difficult to predict due to its volatility.
Analysts are pretty split on where Dogecoin will end up one, three, and five years. The one-year forecasts put Dogecoin at a value between $0.20 and $0.70. Dogecoin started the year below a penny and peaked at $0.73 before coming back down—not exactly a sturdy range.
Dogecoin’s volatility makes it susceptible to government regulations and bans.
Most cryptocurrencies' decline can be attributed to governments around the world clamping down on crypto trading within their borders. Even countries announcing that they’re working to make Bitcoin legal tender isn’t enough to repair the damage.
Cryptocurrencies have also had their share of negative publicity in recent months. Hacking and ransomware attacks have demanded cryptocurrency as payment. Environmental concerns have also raised alarms, with Musk citing energy use as the reason Tesla won't accept Bitcoin as payment for its vehicles.
Because Dogecoin doesn’t have the widespread application that Bitcoin and Ethereum have, it’s more susceptible to these swings in momentum. Only time will tell if Dogecoin is a long-term hold or if jumping ship now is the right move.