Dogecoin Underperforms in Recovery Despite Elon’s Tweets
It’s no secret that Elon Musk, the CEO of SpaceX and Tesla, is a big fan of Dogecoin. He has even mentioned the coin multiple times on Twitter, where he has a net following of 3.6 million. However, despite Musk’s high-profile support, Dogecoin’s price has not moved much, if at all. In fact, since Musk’s initial tweet, the coin has actually lost about 15% of its value.
Elon Musk, the famous business tycoon and Tesla CEO, has been tweeting supportively of Dogecoin—a cryptocurrency that bills itself as “the fun and friendly internet currency.” Dogecoin even managed to raise more than $1 million from the “Dogecoin community” in a fundraiser for the Jamaican bobsled team. That sounds like a lot of money, but Dogecoin still finds its self languishing at the very bottom of CoinMarketCap’s list of cryptocurrencies. Why isn’t Dogecoin performing well in the current market?
Bitcoin volume reached a new historic high during last Wednesday’s collapse. According to Messari, bitcoins with a total value of $29.4 billion were sold on major cryptovaluta exchanges, $1.7 billion more than the previous record set on the 11th. January. It’s a poignant reminder that while prices are falling, stocks are rising. As cryptocurrencies grow, some faster than others, it is important that they are able to evolve. Thanks to its successful mainstream debut, the Dogecoin blockchain has recently surpassed bitcoin in terms of daily transaction value. That’s not bad for a meme coin that was virtually unknown outside the cryptocurrency space earlier this year. The need to scale up here is obvious, and Dogfather Elon Musk has already addressed the issue in his tweet… Ideally, Doge accelerates the blocking time by a factor of 10, increases the block size by a factor of 10, and reduces the cost by a factor of 100. So he wins by a wide margin. To put it bluntly: For someone with only a rudimentary understanding of blockchain technology, this statement sounds a bit like wishful thinking, almost like having your cake and eating it too. This is not what a rocket scientist is supposed to do. For someone who has dedicated his life to developing blockchain, like Vitalik Buterin, this statement is probably like asking a child to buy every toy in the store. Of course, instead of pandering to him on Twitter, Buterin responded in a purely scientific way by publishing a 3,500-word research paper that examines the limits of blockchain’s scalability, what it takes to reach its maximum potential, and how that applies in the real world. Of course, like any research paper, this work was reviewed by four of his colleagues. This article is highly recommended, and even I could understand most of what Buterin said. My only comment is that the focus on Ethereum, a platform that enables smart contracts and complex coding, does not necessarily give us insight into Dogecoin, which is a purely transactional currency network. But instead of a logical response, our rocket billionaire responded with three words and a low-grade recycled meme not even worth printing here. The fact that Musk didn’t even bother to respond directly to Vitalik, but instead responded to a Cointelegraph tweet highlighting Vitalik’s article shows that this is media manipulation for Musk. As we wrote in our daily bulletin of the 4th. As we predicted in our February article Pushing Prices, the market has finally become indifferent to Musk’s tweets, and unlike then, when the reaction was clearly visible on all charts, the price reaction to today’s tweet was only noticeable to those who zoomed in hard. Although I’m still holding it, I’m almost comforted by the fact that Dogecoin underperformed the market during today’s uptrend. Perhaps people have now learned a valuable lesson about investing based on tweets….. Or not.
Better than Bonds
Obviously, I’m not a genius at predicting the future. Anyone who read my post from Friday, in which I noted that another big sale was unlikely, can tell you that. Oz Sultan, aka Crypto Wizzard, announced a double dip. Not that I’d feel bad about digging in this dump. Looks like I’m in good company after all. Ray Dalio has always been my hero for his free-thinking analysis and impact investing.