He has done it again: Elon Musk has again pushed the price of the cryptocurrency Dogecoin. On Monday he exchanged the logo of his short message service Twitter, the blue bird, for a picture of a dog of the Japanese Shiba Inu breed. As of Tuesday afternoon, the dog portrait was still there. The Shiba is also the symbol of the cryptocurrency Dogecoin. After the free advertising by the Twitter boss, their price rose by around 25 percent to 10 cents (as of April 4, 2023, 12 noon).
On Twitter, Musk published a conversation with a representative of the Wall Street Bets forum. This is the Reddit sub-forum that was largely responsible for the fact that the share price of the US games retailer Gamestop briefly went through the roof in early 2021. In the screenshot, Musk can be seen asking if a new platform is needed. Answer: “Just buy Twitter. And exchange the bird logo for a dog.” Musk commented on the image of this exchange with the words: “As promised.”
Musk has often expressed his affection for the cryptocurrency, which originally started as a parody of Bitcoin, and thus moved its course. Around two years ago, in early April 2021, he tweeted Dogecoin as his digital currency of choice and “the people’s cryptocurrency.” The coin then rose to 58 cents at its peak – an increase of almost 10,000 percent. As quickly as it went up, it went down again: After Musk made disparaging remarks about Dogecoin as a guest on the television show “Saturday Night Live”, the price crashed. Payout problems at some crypto exchanges probably also played a role. Many investors suffered losses as a result of the crash.
— Elon Musk (@elonmusk) April 3, 2023
With more than 133 million followers, the Tesla boss has an extremely large reach on Twitter. When it comes to his tweets about Dogecoin, he keeps explaining: It’s just for fun. Musk is hailed by his fans as “DoGFather” (a pun on the English word Godfather). At least one investor finds Musk’s jokes anything but funny. He sued the Tesla boss in a US court last year.
An outstretched middle finger
The accusation: Musk operates a pyramid scheme around Dogecoin. According to the Reuters news agency, Musk has now requested that the $258 billion lawsuit be dismissed. His lawyers argue that it is not illegal to tweet support for or funny pictures about a cryptocurrency. On Friday, Musk moved to have the lawsuit dismissed. On Monday he exchanged the Twitter logo. Coincidence? More likely an outstretched middle finger in the direction of the plaintiffs.
Musk has shown time and again over the years that he has no problem feeding price-sensitive information to an audience of millions – even if he subsequently gets into trouble with the US Securities and Exchange Commission. The information he spreads is not always correct. In the summer of 2018, for example, he wrote that he wanted to take Tesla off the stock exchange and had the necessary funds together (“funding secured”). That was incorrect. Tesla investors then sued Musk. Last month, a US court ruled in Musk’s favor. The question of whether his original statement was true, however, had not been negotiated.
The recurring problems with the SEC don’t seem to slow Musk down, as you can see again. For investors, this behavior is a problem. For Dogecoin owners in particular, it could prove to boomerang sooner or later. The cryptocurrency has a comparatively low market capitalization of just under $14 billion. For comparison: Bitcoin, the largest cryptocurrency, is around 500 billion, Tesla almost 564 billion. Musk’s tweets therefore move the course of Dogecoin relatively strongly.
Even if a court should come to the conclusion that there is no pyramid scheme: A cryptocurrency whose value depends primarily on the tweets of a controversial entrepreneur is not a good investment.
Also read: These are the ten largest cryptocurrencies by market cap
