Barely a week goes by without Elon Musk producing any veiled — or not so veiled — references to Dogecoin, and this week is no different. This time, the owner of Twitter has decided to change the logo of the social network from the familiar blue and white bird to a photo of a Shiba Inu dog, which is the Dogecoin mascot. The price of DOGE skyrocketed in response, rising from $0.076980 before the April 3 tweet to a five-month high of $0.102349 (a 33% gain).
And once again, the Dogecoin community is singing the praises of the mercurial Musk, who alone seems to be the only person supporting the price of the meme token at the moment
And yet, as a handful of more dispassionate owners were quick to point out, it seems that something else is happening beneath the surface of this latest vaguely titillating news. Elon Musk has asked a federal judge to dismiss a class action brought against him, with his request filed the day before the Twitter logo received its restyling. Interestingly, this class action — originally filed in June 2022 — alleges that Musk intentionally pumped the price of DOGE only to then dump it on retail investors, with the plaintiffs subsequently seeking $258 billion in damages.
While Musk’s well-documented love for doing things that drive up the price of DOGE may suggest that the case has some substance, it remains to be seen if the plaintiffs can sufficiently prove that the owner of Twitter and Tesla intended to defraud investors through his actions. Of course, just because the case might end up failing to prove Musk’s guilt doesn’t mean that the average retail investor should confidently invest in Dogecoin, which probably has nothing to offer besides Musk’s now-suspected cheerleading
Musk’s latest move Dogecoin
It may only be April, but 2023 has already been quite a busy year as far as Elon Musk and Dogecoin references are concerned. First, Musk participated in the Super Bowl wearing a Dogecoin t-shirt (and sitting next to media mogul Rupert Murdoch). Then, just a couple of days later, we had the February Twitter post where he posted a photo of the ‘new CEO of Twitter’, who was his Shiba Inu dog,
Needless to say, the price of Dogecoin increased in response to these two small back-t0-back stunts, gaining about 11% in a couple of days. The reason? Well, the cynic would be tempted to argue that Dogecoin owners and investors are so hungry for any news of genuine adoption that they will go crazy in response to even the slightest mention of Musk
‘s meme token.
On the other hand, a more charitable reading is that the above references to Dogecoin are equivalent to Musk reaffirming that, sooner or later, he will integrate DOGE payments into Twitter in one form or another.
This possibility has been the order of the day since Musk offered to buy the social media company in April 2022, with the owner of Tesla suggesting at the time that it could introduce “an option to pay [for Twitter Blue subscriptions] in DOGE.” It recently returned to the limelight following a report by the Financial Times, which at the end of January revealed that Musk was pushing Twitter to carry out its plans to bring digital payments to
This has also helped to increase the price of Dogecoin, even though the insiders quoted by the Financial Times have not made explicit mention of the DOGE, and even though they said that digital payments on Twitter would initially only involve fiat currencies. However, the appearance of the report reinforced hopes that Twitter would eventually use DOGE, and it seems that those hopes flared up once again when the social network
changed its logo this week.
As a result of this logo change, Dogecoin also briefly launched Cardano as the eighth largest cryptocurrency on the market (by market capitalization), although it has since returned to ninth place in the ranking. However, it’s still up 30% in a week at the time of writing this article, and it’s been trending widely on Twitter
Burying a class action
Once again, it could be argued that it is an extremely sad indictment against Dogecoin that all Elon Musk has to do to increase its price is produce some inane memes related to the Doge, with investors lapping at it for some bizarre reason. However, what is interesting about this latest episode is its timing, given that the logo change occurred on the same day that the news of Musk’s filing to have the aforementioned class action rejected broke
In fact, several observers have stated that the change was implemented in order to divert attention from the cause, as searches for ‘Musk’ and ‘Dogecoin’ would probably have returned pages related to the change of logo (rather than the cause).
If this is true, then Musk’s diversion attempts were only half successful. While searches for the terms above mainly produce results related to the Twitter logo, there are still some related to the $258 billion lawsuit. That said, it seems like more people online are talking about the logo, so Musk might still be happy with his latest tricks.
As for the lawsuit, Musk’s lawyers filed for the dismissal of the case, based on the lack of evidence. They referred to the case statements as an ‘imaginative work of fiction’, adding that there is ‘nothing illegal in tweeting words of support or funny images about a legitimate cryptocurrency that continues to hold a market capitalization
of almost $10 billion’.
The case remains at a very early stage, so it would be difficult — if not foolish — to discuss where it might end up. Suffice it to say that Elon Musk’s shares and tweets in the last two years have undoubtedly increased the price of Dogecoin, which has also seen an 87% drop from the all-time high of $0.731578 set in May 2021 (roughly around the time when Musk appeared on Saturday Night Live). It’s also extremely unlikely that Musk isn’t aware of the fact that DOGE increases in price on almost every occasion he mentions it
The case notes that Musk “has been tweeting about Dogecoin since at least April 2, 2019, when he shared a satirical article by The Onion on the volatility of Bitcoin’s prices and added: ‘The value of Dogecoin may variate’. Musk continued: “Dogecoin could be my favorite cryptocurrency. It’s really amazing.”
Since it published the above tweet, DOGE has increased in price by about 3,266% and even by 25,000% (in terms of the all-time high of May 2021). It is questionable that all of this is due to the cheering of Musk, who has acknowledged that he holds DOGE (and that
Tesla owns some).
Ultimately, Dogecoin remains a meme token with little utility compared to other cryptocurrencies. At the moment, its owners are pinning their hopes entirely on the unconfirmed possibility that Twitter will eventually introduce DOGE-based payments. This is far from a certainty, but what is certain is that investing in the currency remains a risky activity and that investors with a low risk tolerance may prefer to look towards more useful cryptocurrencies with a better chance of approval
than an unreliable billionaire.