Thursday, May 23, 2024

Could Elon Musk help the Dogecoin cryptocurrency surge to a $1 value?

Benzinga looks at how Elon Musk's public comments on the popular DOGE memecoin has affected its perceived value.

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Two DOGE coin displayed on top of a smartphone with Elon Musk twitter profile open.

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Tesla Inc. CEO Elon Musk has been a fan of DOGE for some time. He first began discussing the meme coin project in 2019, when he posted on social media "Dogecoin might be my fav cryptocurrency. It's pretty cool."

While this post did not have much impact on DOGE at the time, Musk continued posting about the token. He posted a meme about DOGE adoption in July 2020 that was captioned "It's inevitable."  After multiple years of posting, the token took off in 2021, reaching an all-time high of nearly $0.74. 

It's clear that Musk's opinion on the memecoin is valued in the crypto community, and Benzinga has noted that the price of DOGE reacts to his comments. 

So, it's no surprise that Musk's latest comments on DOGE made waves in terms of the token's price. Musk was in Germany in March 2024 speaking at Tesla's gigafactory in Berlin, which recently reopened following an arson attack

During a Q&A, Musk was asked, "When will I be able to buy a Tesla with Dogecoin?" He replied, "At some point, I think we should enable that."

Musk also detailed some of the reasons behind his endorsement of DOGE. "The reason I ended up sort of endorsing Dogecoin is that when I was walking around the factory at Tesla, some people asked me to support Doge. Then, at SpaceX, some regular guys said, 'Can you support Doge?' and I was like, 'Doge is the people's crypto, so I will support it.'"

Musk also noted that you can buy Tesla merchandise with DOGE, so it has some systems in place to facilitate DOGE transactions.

Another important note is that Tesla accepted Bitcoin for purchases of Tesla cars for a short time in 2021. However, the program ended quickly, with Musk citing environmental concerns as the reason to stop accepting Bitcoin. This is important because DOGE is a fork of Bitcoin, meaning it uses the same method of consensus (proof of work) that Bitcoin uses, thereby posing the same environmental risks that Musk mentioned in 2021. 

This means that electricity use could be a roadblock for DOGE in terms of the ability to use it to buy a Tesla car. 

Despite this, Musk's word should be taken at face value. DOGE reacted strongly, going from a low of $0.165 on the morning of March 14 to a high of $0.191, resulting in a gain of over 15%. The token sold off into the afternoon, but the sentiment is still largely bullish. Will dogecoin go up if Tesla were to begin accepting DOGE? Let's say a $1 price target would not be out of the question. 

For reference, a $1 DOGE would have a market cap of around $140 billion, approximately one-third that of Ethereum and one-tenth that of Bitcoin.