Dogecoin: The Memecoin That Elon Musk Turned into a Market Mover

Despite having no relationship with the founders of the currency, Musk has ended up sponsoring it… and taking it to the White House.

Elon Musk has a knack for moving markets with his statements, whether intentionally or unintentionally. His latest foray into the realm of finance saw him propel Dogecoin to new heights — and then quickly watch as it plummeted. But how much does Musk really own? And what role does he play in the memecoin's astronomical rise?

When Musk took to the stage of Saturday Night Live in May 2021, donning a samurai outfit and brandishing a katana, few could have predicted the impact his words would have on the cryptocurrency market. Yet, as he uttered the fateful phrase, "It's a hustle," while discussing Dogecoin, the asset's value took a nosedive, losing more than a third of its worth in a matter of hours.

But Musk's influence on Dogecoin extends far beyond that single quip. In fact, his statements about the memecoin have played a pivotal role in shaping its trajectory. As the world's richest person, Musk's words carry immense weight, especially in the world of finance. And Dogecoin, being the queen of memecoins, has basked in the glow of Musk's attention — for better or for worse.

If you glance at Dogecoin's price history on CoinMarketCap, you'll notice that the date of Musk's SNL appearance is highlighted as one of the most significant moments for the asset. After days of anticipation (Musk had previously declared Dogecoin to be his favorite cryptocurrency), the cyptocurrency lost more than a third of its value.

A few months later, Musk once again sent shockwaves through the market with a Twitter poll: "Do you want Tesla to accept Doge?" This cryptic message hinted at the possibility of customers being able to purchase their cars using the memecoin, an idea that still remains up in the air. But in December of the same year, he announced that his company would indeed begin accepting payment for certain products in this digital currency. Within minutes, the asset surged by 33%.

In short, when Musk speaks, Dogecoin responds.

But beyond merely talking about it, Musk also owns some of this currency. His holdings, in fact, have been the subject of speculation on several occasions. Even today, it's still unknown how much he has. Last January, in a conversation on X Spaces, he said that he owns "a lot of DOGE," without detailing the amount.

This asset was created back in 2013 by two friends — Adobe engineer Jackson Palmer and software developer Billy Markus. It emerged as a satirical alternative to the bitcoin fever, poking fun at an industry that had attracted an excessive amount of money. To symbolize the joke (and the asset), they used the image of a Japanese dog breed — the Shiba Inu — which had become the quintessential internet meme three years earlier.

Despite having no relationship with the founders of the currency, Musk has ended up sponsoring it… and taking it to the White House. The founder of Tesla, alongside businessman Vivek Ramaswamy, will direct the newly-created Department of Government Efficiency. The acronym of this department — DOGE — is also how the currency is known in the crypto markets. Musk’s appointment to the incoming Republican administration has boosted the value of this token, which has risen by 130% since the U.S. presidential election, reaching almost $0.39 per unit.

After starting out as a joke, Dogecoin has become the seventh most important cryptocurrency, with a market value of about $56 billion. Jorge Soriano, CEO of the Criptán trading platform, believes that this asset owes a lot to the founder of Tesla. "If Elon Musk hadn't talked so much about Dogecoin, I don't think the currency would be where it is today," he shrugs. The personalization of DOGE around Musk is evident.

However, experts warn of the risks it may entail for investors, especially in the long-term. "If the value of Dogecoin is excessively linked to the figure of Elon Musk, any change in his [level of] interest or reputation can disproportionately impact the asset. The greatest risk is volatility and lack of confidence in the long-term," Soriano cautions.

Abel Peña, sales director of Bit2Me, agrees with this interpretation. "The personalization of DOGE around Musk is risky, because it centralizes the perception of a currency that should be decentralized. This makes it more dependent on [Musk’s] public image and increases [the cryptocurrency’s] volatility, complicating its adoption as a reliable asset," he notes.

It's true that the nature of Dogecoin is still a joke, to the point that it's become the memecoin par excellence. That is, it's a currency that uses the force of speculation and the coordinated behavior of the online community to challenge the traditional financial system.

Carlos Salinas, a professor of Blockchain and Digital Asset Investment at the Madrid-based IEB, explains to EL PAÍS that the crypto community is a very important