Elon Musk and Snoop Dogg Push Cryptocurrency to Record Highs as Tesla Invests Big
After an interesting feel weeks on Wall Street, a new mover and shaker has burst onto the scene; cryptocurrency. While
After an interesting feel weeks on Wall Street, a new mover and shaker has burst onto the scene; cryptocurrency. While crypto isn’t new, the strong showing it’s making in the markets this week is unprecedented. Boosts from celebrity names like Elon Musk and Snoop Dogg have pushed the value of Bitcoin and Dogecoin into record highs, and Musk’s company Tesla is banking big on the future of crypto.
Musk and Snoop Boost Bitcoin and Dogecoin
As the Reddit Revolution soared in late January, rumblings began about cryptocurrency. The army of small investors began chattering about raising the value of a cryptocurrency Dogecoin, which began as a joke. The crypto rival of Bitcoin boasts the goofy shocked face of a Shiba Inu dog known as, “Doge,” and was never expected to amount to much. But as limits began choking the growth on volatile stocks like GameStop (GME), AMC and others, eyes turned to Dogecoin and Bitcoin for the next phase of, “sticking it to Wall Street.”
But just like the GME Revolution, things really kicked into overdrive after a tweet – a tweet by Elon Musk. Per CNBC, “Retail investors have pumped up dogecoin’s price recently, taking their cue from Musk. The Tesla CEO has tweeted about dogecoin several times over the years.
More recently, he posted a picture of a fictional ‘Dogue’ magazine — a play on the fashion title ‘Vogue’ — leading to an 800% surge in dogecoin’s price.
…In his earlier statement of support for bitcoin, Musk he didn’t have a ‘strong opinion’ on other virtual currencies and that his tweets about dogecoin were meant as jokes. ‘But fate loves irony,’ Musk said recently on the social audio app Clubhouse. ‘The most entertaining outcome and the most ironic outcome would be that dogecoin becomes the currency of Earth in the future.’
Musk has made several recent tweets about dogecoin. Just two days after saying he planned to take a break from Twitter ‘for a while,’ Musk returned, posting dogecoin memes and calling the token ‘the people’s crypto.’
He has been joined by the likes of Snoop Dogg and Kiss singer Gene Simmons in posting tweets backing dogecoin. Snoop Dogg, whose real name is Calvin Cordozar Broadus Jr., tweeted at Musk with a parody of one of his albums. The words on the album cover are replaced with ‘Snoop Doge’ while the doge image covers the rapper’s face.”
Reminiscent of the Little Guy vs Wall Street Revolution, but With a Twist
It’s not just dogecoin seeing a surge in value. Bitcoin has also been boosted recently by activity from Musk and others. Although the surges have been dramatic, the stage was set over the past year or two for this to occur. Pay platform giant PayPal began trafficking in cryptocurrencies, joining a host of other small consumer-based companies interacting with the digital currency. This broadening of availability to consumers meant that cryptos were likely to surge in value over the next year, to some degree. But Musk’s dabbling and celebrity intervention has accelerated that surge.
The New York Times explains the everyman draw of Bitcoin and other cryptos; “Cryptocurrencies began appearing in 2009 after someone known as Satoshi Nakamoto — whose real identity has never been revealed — released the rules and software for Bitcoin. The virtual currency, which has no physical backing, could be sent electronically from one user to another, anywhere in the world. Bitcoin was run by a decentralized network of computers that keeps track of all transactions, so it could not be controlled by a government or company.
Bitcoin was initially described as a way to pay for things online. But the need for transactions to run through the decentralized system made it slow for payments.
Over time, investors became more interested in Bitcoin because it was not controlled by any government or company. The software that sets the rules for Bitcoin also allows only 21 million Bitcoin to ever be created, so it was a scarce resource.”
Wall Street, “outsiders,” and pot-stirrers like Musk enjoyed the market-churning potential of cryptocurrency and celebrities who push people-centric investment instead of hedge fund wealth hoarding jumped on board. The climb to these highs has been slow, but predictable. And once the GME surge leveled out, Reddit Revolutionaries were looking for somewhere new to shake things up.
Tesla Invests Big on Bitcoin
Aside from Musk’s jokes about doge, another catalyst was the stunning announcement that his flagship auto/tech company Tesla was investing a whopping $1.5 billion in Bitcoin, and would henceforth be accepting the crypto as payment for their products.
Once Musk made the announcement, the predictable surge followed, tracking alongside dogecoin’s.
CNBC writes, “Two weeks ago, the billionaire Tesla owned added the hashtag #bitcoin to his Twitter bio, a move that helped to briefly push up the price of the cryptocurrency by as much as 20%. Two days later, he said on the social medial chat site Clubhouse: ‘I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin.’”
But those following Musk’s lead should be cautious. Although Musk enjoys shaking up the market and can be relied upon to encourage chaos, it’s questionable whether or not this chaos will benefit the small-time investors he’s stringing along with him. Musk has been charged with manipulating the market before, along with fraud, and was forced to give up his place as chairman of Tesla’s board, paying tens of millions in fines for past behavior.
If Musk is hoping the everyman Reddit Revolutionaries will shake up the market in a way he’s prevented from doing legally, he may be in luck. It’s clear that returning to business as usual isn’t on anyone’s mind in their quest to prove that Wall Street’s emperor has no clothes. However, small time investors need to remember that upending the market may benefit big players like Tesla as they maneuver into favorable positions, but volatile stocks will always come with great risk for the people with the most to lose.