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In the early morning of October 30, Beijing time, the cryptocurrency website CryptoCompare showed that the price of Dogecoin soared to US$0.149 per coin, setting a new price high in the past six months, with the largest increase of 62% within 24 hours. As of press release by Jiemian News, each Dogecoin is US$0.1388, with a total market value of US$18.97 billion. After the sharp rise on the 29th and 30th, Dogecoin has returned to the price in April this year.
Judging from the timing of the recovery, the price of Dogecoin began to climb upward on October 26th, and then rose in a straight line on the 29th. The substantial increase in the price of Dogecoin is directly related to the successful acquisition of Twitter by Tesla CEO Elon Musk. According to reports from CNBC and other media, on October 27, local time, Musk acquired the world-famous social media Twitter for US$44 billion.
Previously, Twitter allowed users to tip Bitcoin and Ethereum to creators, but it did not issue a cryptocurrency wallet product. Industry insiders said that the surge in Dogecoin may be related to market speculation that Musk will develop an encrypted wallet on Twitter.
According to public information in the U.S. court, Musk once proposed the idea of blockchain social media in a private conversation, in which he mentioned that users can pay to write their messages into the blockchain (such as spending 0.1 Dogecoin to post or forward comments), thus blocking the vast majority of spam and protecting freedom of speech.
Software engineers Jackson Palmer and Billy Markus created Dogecoin in 2013. The technology they mainly used was taken from the source code of Bitcoin. The original intention was to mock the speculative nature of cryptocurrency. When it was issued, it was only US$0.00026 per coin.
According to CoinMarketCap data, in May 2021, Dogecoin hit a record high price of $0.73 per coin, with a cumulative increase of 2,807 times since then. Since May 2022, Dogecoin has remained below $0.09 due to the overall cryptocurrency environment.
It is worth mentioning that because its name is a combination of Dogecoin and Elon Musk, a token called Dogelon Mars has also risen accordingly. The price of each token is US$0.0000004796, an increase of more than 57% in 24 hours, with a market value of US$249 million, and a trading volume of US$63 million in the past 24 hours. However, this token has not yet shown any connection with Musk, and the founder is unknown, bringing greater uncertainty to investment and the risk of a Ponzi scheme.
From the market’s perspective, Musk’s “binding” relationship with Dogecoin is very close. In 2019, Musk entered the game and purchased a large amount of Dogecoin. He has publicly praised the development prospects of this coin many times and stated that he "will not and does not want to reduce his holdings of Dogecoin."
During the several pushes and pulls between Musk and Twitter’s acquisition, the price of Dogecoin also fluctuated like a roller coaster.
For example, in April this year, when Musk expressed his thoughts on acquiring Twitter, he suggested using Dogecoin as a payment method for the Twitter subscription service Blue, and the price of Dogecoin immediately soared. Dogecoin experienced a massive sell-off in June when he first attempted to exit the Twitter trade.
The influence of the world's richest man has indeed brought the attention of investors to Dogecoin. Many investors bought this cryptocurrency because of Musk's "platform", but suffered heavy losses in the crash in May. Musk was also sued by investors for this.
In June, an investor sued Musk and his companies SpaceX and Tesla, demanding US$258 billion in compensation, arguing that "Musk used his position as the world's richest man to hype and manipulate the Dogecoin pyramid scheme for profit, exposure and fun." In September, seven more investor plaintiffs and six defendants were added to the lawsuit.
The financial report for the second quarter of 2022 shows that Tesla sold nearly 75% of its Bitcoin holdings and cashed out US$936 million. In the subsequent conference call, Musk said that Tesla did not sell Dogecoin, but sold its Bitcoin holdings to improve its cash position, and was open to increasing its holdings of Bitcoin in the future. But Tesla does not disclose its Dogecoin holdings.
