Dogecoin surges 35% as Elon Musk’s Twitter deal approaches close

Dogecoin, the cryptocurrency branded after a viral dog meme from 2013, is up 35% since Monday as Elon Musk’s deal to purchase Twitter approaches a detailed.

The worth of the token often moves in lockstep with comments made by the Tesla CEO. Doge is up 10% within the last 24 hours after the SpaceX chief modified his Twitter bio to “Chief Twit” on Wednesday. Similarly, the meme token saw a price surge in April when Musk first floated the thought of adding dogecoin as a payment method for Twitter’s subscription service, Blue. It also saw a sell-off in June as Musk tried to back out of the acquisition.

But following a monthslong battle between Musk and Twitter over the sale, all signs point to Musk closing the deal by his deadline of 5 p.m. on Friday. The choice is Musk facing trial in a Delaware courtroom.

The worth surge in dogecoin — pronounced “doje coin” with a soft “g” sound — also coincides with rumors that Twitter is prototyping its own crypto wallet.

Jane Manchun Wong, a popular tech blogger known for her prescient calls within the space, tweeted on Monday that Twitter was “working on a ‘wallet prototype’ that supports ‘crypto deposit and withdrawal.'”

“We do not know which type of cryptocurrency might be supported yet, or which network,” Wong told CNBC.

Twitter has not announced a cryptocurrency wallet product, however the social media company did roll out a tipping feature last yr, which allows users to send creators bitcoin via the platform. In February, Twitter added ether to its suggestions function.

It is not totally clear when or why dogecoin captured the center of Elon Musk. The billionaire Tesla and SpaceX CEO has spent years talking up the token. 

Musk’s tweets with oblique references to dogecoin have often sent it to recent record-high prices. These posts even have helped drive retail investor interest.

“You might have this one guy who’s kind of just like the cult leader,” said Asheesh Birla, a general manager at Ripple, which manages another cryptocurrency used for payments.

Musk, nevertheless, is not alone in his celebrity endorsement of the animal-branded token. Dallas Mavericks owner Mark Cuban, Snoop Dogg and Kiss bassist Gene Simmons have all publicly rallied behind dogecoin prior to now. Even beef jerky brand Slim Jim got in on the motion at one point.

Doge’s price surge in 2021, attributed by one analyst to the run-up to Musk’s “Saturday Night Live” appearance on May 8, 2021, even managed to crash Robinhood’s trading app.

But there was more to dogecoin’s record price run than simply celebrity backing. There has also been the enduring sentiment to “stick it” to the establishment. 

“Dogecoin is like this type of big F-U to the system,” said Avi Felman, head of trading at BlockTower Capital. “It’s like, ‘Yeah, this thing can have value, too. And I’m just going to purchase it, because I’ll buy it.'”

“Elon is largely pushing up this message of, ‘Why cannot dogecoin have value?'” said Felman of doge’s 2021 price rise. “People like these narratives. They like these stories. They like these jokes. And dogecoin just captured the mind and imagination of each retail investor.”

“You might have a rabid online community,” Birla said of the fan base of doge evangelists.

In 2013, software engineers Billy Markus and Jackson Palmer launched the satirical cryptocurrency as a option to make fun of bitcoin and the numerous other cryptocurrencies boasting grand plans to take over the world. 

“You might have Twitter and Reddit, where they’re all kind of congregating and fascinated with methods to pump dogecoin,” said Birla.

In the meanwhile, there are only a few cases for the token’s use. Though more merchants began to accept dogecoin as a way of payment last yr, it’s nowhere near the extent of adoption crucial for use as any kind of actual currency substitute. 

“Lately it’s all one big marketing ploy,” Mike Bucella, BlockTower Capital general partner, previously told CNBC.

Unlike rival cryptocurrencies corresponding to ether, which let programmers construct applications on their platform to do things like lend and borrow money, there is not much anyone can do with dogecoin.

Dogecoin is not a reliable store of wealth either, on condition that this typically requires a certain degree of long-term faith within the coin and the blockchain upon which it has been built. 

“For those who have a look at the dogecoin protocol itself, I do not even know if there’s anyone over the past several years who has added recent functionality or code to it,” said Birla. “Dogecoin doesn’t really have a development team behind it.”

Given these limitations, the run-up in dogecoin appears to be purely speculative. Dogecoin has value because other people imagine that it has value — and since they imagine that another person is willing to purchase it from them at the next price.

Disclosure: “Saturday Night Live” is a TV show of NBCUniversal, the parent company of CNBC. CNBC owns the exclusive off-network cable rights to “Shark Tank,” which features Mark Cuban as a panelist.

Correction: This text has been updated to reflect that Elon Musk modified his Twitter bio to “Chief Twit.”