Dogecoin surges 35% as Elon Musk’s Twitter deal approaches close

DogecoinThe cryptocurrency, named after a viral dog meme from 2013, is up 35% since Monday after Elon Musk agreed to buy. I tweet a close is approaching.

The price of the token often moves in step with the comments made by Tesla CEO. Doge is up 10% in the past 24 hours after the SpaceX chief changed his Twitter bio to “Chief of Twit” on Wednesday. Similarly, the meme token saw a price spike in April when Musk first floated the idea of ​​adding dogecoin as a payment method for Twitter’s subscription service, Blue. It also saw a selloff in June after Musk tried to back out of the purchase.

But after a month-long battle between Musk and Twitter over the sale, all signs point to Musk closing the deal by his deadline of 5pm on Friday. The alternative is that Musk faces trial in a Delaware courtroom.

The price spike in dogecoin — pronounced “doje coin” with a soft “g” sound — also coincides with rumors that Twitter is prototyping its own crypto wallet.

Jane Manchun Wong, a The popular tech blogger known for her predictive calls into space, tweeted on Monday that Twitter was “working on a ‘wallet prototype’ that supports ‘crypto deposit and withdrawal'”.

“We don’t know what kind of cryptocurrency will be supported yet, or which network,” Wong told CNBC.

Twitter has not announced a cryptocurrency wallet product, but the social media company created a tipping feature last year that allows users to send creators bitcoins through the platform. In February, Twitter added ether to its tips feature.

It is not entirely clear when and why dogecoin captured the heart of Elon Musk. Billionaire Tesla and CEO of SpaceX it’s been years speaking up to the mark.

Musk’s tweets with sometimes oblique references to dogecoin have often sent it to new record high prices. These posts have also helped spur interest from retail investors.

“You have this guy who is kind of like a cult leader,” said Asheesh Birla, a general manager at Ripple, which manages an alternative cryptocurrency used for payments.

However, Musk is not alone in his celebrity endorsement of the animal brand. Dallas Mavericks owner Mark Cuban, Snoop Dogg and Kiss bassist Gene Simmons have all publicly rallied behind dogecoin in the past. Even the beef brand Slim Jim got in on the action at one point.

Doge’s 2021 price surge, attributed by one analyst to the run-up to Musk’s appearance on Saturday Night Live on May 8, 2021, even managed to crash robinhood trading app.

But there was more to dogecoin’s record price than just celebrity support. There has also been a lasting sense of “sticking it” to the institution.

“Dogecoin is like this kind of big FU for the system,” said Avi Felman, Head of Trading at BlockTower Capital. “It’s like, ‘Yeah, this thing might have value, too. And I’m just going to buy it, because I’m going to buy it.'”

“Elon is basically pushing this message: ‘Why can’t dogecoin have value?'” said Felman of the doge price hike in 2021. “People love these stories. They love these stories. They like these jokes. And dogecoin just captured the mind and imagination of every single retail investor.”

“You have a rabid online community,” Birla said of the doge evangelists’ fan base.

In 2013, software engineers Billy Markus and Jackson Palmer launched the satirical cryptocurrency as a way to mock bitcoin and the many other cryptocurrencies that boast grandiose plans to take over the world.

“You have Twitter and Reddit, where everyone gets together and thinks about how to mine dogecoin,” Birla said.

Whether dogecoin has value is debatable.

At the moment, there are very few use cases for the token. although More merchants started accepting dogecoin as a payment method last year, it’s nowhere near the level of adoption needed to be used as any kind of actual currency substitute.

“It’s all one big marketing gimmick these days,” Mike Bucella, general partner of BlockTower Capital, previously told CNBC.

Unlike rival cryptocurrencies such as etherwhich allows programmers to build apps on their platform to do things like lend and borrow money, there’s not much anyone can do with dogecoin.

Dogecoin is not really a reliable store of wealth, given that this usually requires a certain degree of long-term trust in the currency and the blockchain it is built on.

“If you look at the dogecoin protocol itself, I don’t even know if anyone over the last few years has added new functionality or code to it,” Birla said. “Dogecoin doesn’t really have a development team behind it.”

Given these limitations, development in dogecoin appears to be purely speculative. Dogecoin has value because other people believe it has value – and because they believe someone else is willing to buy it from them at a higher price.

Disclosure: “Saturday Night Live” is a television show of NBCUniversal, the parent company of CNBC. CNBC owns the exclusive off-network cable rights to “Shark Tank,” which features Mark Cuban as a panelist.