How did Elon Musk’s son cause a spike in the price of dogecoin?
The stock market has been extremely volatile thanks to Elon Musk’s son. In recent weeks it’s been GameStop’s stock price skyrocketing to nearly $500, with other smaller companies falling suit and a large part of the enormous gains is due to the subreddit community r/WallStreetBets. However, Elon Musk is also partly to blame for certain stocks rising above their expected prices.
Elon Musk is known for sharing which stocks he’s investing in on Twitter. A recent tweet sent the price of dogecoin skyrocketing to $.08. It doesn’t sound like a huge price change but considering the meme cryptocurrency was barely worth a cent a year ago. It’s a huge deal!
There are plenty of factors that sent dogecoin’s price to $.08, but Elon Musk’s tweet got it over the hump to its highest price in five years.
What is dogecoin?
To start, dogecoin is a cryptocurrency. A simple definition is it’s a form of currency used exclusively online to buy goods & services. Its value is determined by the agreed-upon value we give it.
Cryptocurrencies work on a blockchain. Traditionally a bank keeps a ledger, or a list of all transactions, in a central place. On a blockchain, the ledger is decentralized, meaning the ledger is kept on thousands of computers across the globe. It does provide security & efficiency. How the two work together is blockchains allows cryptocurrencies to move faster, safer, and cheaper, especially in foreign transactions.
The biggest cryptocurrency is bitcoin, and anyone can make a bitcoin. Some start up companies will create a cryptocurrency to fundraise, and investors can exchange the “coins” for the future good or service they’re trying to create. This brings us to dogecoin, which is based on an internet meme of a Shiba Inu. The reason the coin skyrocket is based on the value we give it.
Bought some Dogecoin for lil X, so he can be a toddler hodler
— Elon Musk (@elonmusk) February 10, 2021
The infamous purchase
According to Elon Musk’s Twitter account, he invested in dogecoin for his son X Æ A-Xii. If you’re confused by his name, don’t worry, so are we. However, dogecoin’s price jumped from $.069 to $.074 within an hour of sending the tweet.
Basically, using the principle of we give a cryptocurrency its value. When Elon Musk, the richest man in the world, says he bought dogecoin for his son. People assumed there was value because the richest man should be a smart investor. It led people to put value in dogecoin and raised the price.
Elon Musk isn’t the only reason
As much as people contribute dogecoin’s price surge to Elon Musk, he tweeted after the spike. Elon Musk’s tweet probably helped keep dogecoin’s price about $.05 through Sunday. Bitcoin is probably more to blame for dogecoin’s price than Elon Musk. Bitcoin’s price rose $5,000 two days before Elon Musk tweeted he bought dogecoin for his son. A lot of the time, when Bitcoin rises, other cryptocurrencies rise as well.
GameStop is still why the stock market is extremely volatile. Many are buying dogecoin as a joke, like when the cryptocurrency first came out in 2013. Reddit is also extremely high on dogecoin, according to CNBC. r/SatoshiStreetBets is the cryptocurrency equivalent of r/WallStreetBets. The subreddit is named after Satoshi, the anonymous creator of that open-source program that creates cryptocurrency.