The future of Dogecoin is unquestionably linked to its price, but also to what Elon Musk might do with it. Recently, the CEO of Tesla has clearly expressed his approval for the project.
A mockery for those who have developed cryptocurrencies with use cases, whitepapers and well-defined purposes: the CEO of Tesla, one of the richest men in the world, has become involved in the cryptocurrency born as a joke, which has the symbol of a dog and no particular use case.
Elon Musk’s tweets, combined with community pumps, have led Dogecoin to rise in price. In just a few months, it went from being worth $0.002 to a peak of 73 cents.
Not bad for a “satirical” cryptocurrency. The market crash of recent days has brought it down to 33 cents, but Dogecoin’s growth is still stratospheric.
Elon Musk, the uncertainty over the future and price of Dogecoin
With a few tweets, Elon Musk has shown that he can steer the market as he pleases. He did it with Bitcoin, with well-known consequences, ranging from rallies to crashes.
The tweets about Dogecoin have also had their influence, especially because of the popularity they have given to DOGE. Until the CEO of Tesla decides whether or not to include it as a means of payment, what is certain is that Musk is pushing for its development, as evidenced by the tweet in which he invites those who want to contribute to submit their ideas on Github.
His involvement is so obvious that some people started to think that the definition of “Former CEO of Dogecoin” was not true at all.
So much so that Musk himself was forced to point out that he is not the head of Dogecoin:
Please note Dogecoin has no formal organization & no one reports to me, so my ability to take action is limited
— Elon Musk (@elonmusk) May 25, 2021
“Please note Dogecoin has no formal organization & no one reports to me, so my ability to take action is limited”.
A stance that may alarm Dogecoin fans.
In fact, some believe that with or without Elon Musk, the future of Dogecoin is already sealed. Forget $1, which is the price the DOGE community dreams of.
Galaxy Digital CEO Mike Novogratz was quite clear about Dogecoin. In the Goldman Sachs report dedicated to cryptocurrencies, he stated:
“Dogecoin is a very speculative asset, much more so than bitcoin. It likely doesn’t have long-term legs because no institution is buying it and at some point, retail will lose interest. Dogecoin started as a joke and grew for two reasons. First and foremost is tribalism in the investing community. It’s the same thing we saw with the rise in GameStop, which was driven by a young community of investors who have been empowered as financial players through trading apps and social media platforms. Second, value is showing up in new places because the government is printing a lot of money. It’s important to keep that in mind when thinking about some crypto assets and equities like GameStop that have short term potential but no long-term viability”.
In the same report, Grayscale CEO Michael Sonnenshein says:
“Dogecoin is a demonstration of just how easy it is to create a digital asset. It, along with a slew of other digital assets, was created by enthusiasts basically for fun. That drills home the point that it’s important for investors to scrutinize use cases and whether the asset is viable and has the potential to gain real world traction by solving a real world problem versus a solution in search of a problem that may not exist”.
Certainly, Dogecoin’s FOMO has led not only to the price rising but also to mild attempts at imitation, the best known of which is probably Shiba Inu (SHIB). But many other speculative cryptocurrencies have sprung up, with no particular function other than to try to make holders rich, in the hope that everything will go in their favour.
But if Mike Novogratz is right, there is no future for them if there is no utility.
Dogecoin does have some use cases. For example, a billionaire like Mark Cuban has chosen to accept DOGE as a means of payment for gadgets for the Dallas Mavericks team of which he is president. Why? Because the community is willing to spend DOGE, unlike Ethereum or Bitcoin which are being credited as valuable reserves.
Perhaps this discriminating factor will determine Dogecoin’s fate: if it manages to be a means of payment it can survive, even without Elon Musk’s tweets, otherwise the bubble could burst.