In the days of his earliest business ventures, Elon Musk kept a fairly low profile. There was little public drama or performance when he was with Zip2 or PayPal. Even in the early days of Tesla and SpaceX, in the early to mid 2000s, we rarely heard from him. In the last decade, however, he has become increasingly outspoken and taken to using his platform on social media to express himself, quite often in a fairly rash manner.
In fact, some of his 2018 tweets were so poorly thought through that he is no longer legally allowed to tweet about Tesla without approval from the company’s legal team. These tweets about selling stock and others that inaccurately said the company had secured funding to go private drew the attention of the Securities and Exchange Commission. The SEC is the US governmental body that works to prevent market manipulation.
It was some of these tweets about selling Tesla stock and seeing how quickly the market responded that may have given Musk the idea to use Twitter to influence the cryptocurrency market. With over 80 million followers, many of whom are diehard fanboys, it’s the perfect platform.
More recently, Grimes’ ex-boyfriend has become heavily involved in promoting the meme coin Dogecoin. This article is going to look at just how much influence on the cryptocurrency market Musk has and what that might lead to in the future.
Musk and Dogecoin
Dogecoin is the first meme coin. It was originally created as a joke in 2013, but once it was released, it managed to secure a devoted following of investors. Some were doing it to be in on the joke, some just enjoyed being able to invest in something so unique. It has become so well established and legitimate that on cryptocurrency exchanges such as OKX, it is one of the only meme coins to be categorized as both a meme coin and a top coin.
Like all cryptocurrencies, it has had its ups and downs, yet it is far more stable and legitimate than most meme coins are. Dogecoin’s first month on the market was turbulent — there was a spike in value, followed by a crash, followed by a major theft. Since 2014, however, things have been fairly smooth sailing with Dogecoin being a popular, but not overly hyped, cryptocurrency.
That all changed in 2020. That year, Musk began tweeting about Dogecoin and encouraging his followers to invest in it. Some of these tweets could be considered jokes or were merely references to the coin. Many of his followers, however, took them all as serious encouragement to invest.
The frequency of his tweets about Dogecoin increased in 2021. With the exception of one reference to Dogecoin as a ‘hustle’ during his SNL appearance, each of his mentions of Dogecoin and apparent calls to invest have been matched by a rush to purchase Dogecoin and a spike in its value.
If Musk didn’t have any stake in Dogecoin or promoted a variety of cryptocurrencies equally, it is unlikely that people would have a problem with his behavior. As it stands, however, he is a major holder of Dogecoin and benefits financially whenever its value increases.
In any other financial sector, the level of influence Musk has and how he wields it would draw the attention of the SEC. In fact, some critics have begun to call for an SEC investigation and a lawsuit has recently been filed against Musk, Tesla and SpaceX for how Musk uses Dogecoin.
Dogecoin is too big and established to be rug pulled, so that is less of a concern here. The concern lies with how much power a single individual should be able to have over an entire cryptocurrency.
The Dogefather is a fun nickname and a cute joke about this eccentric billionaire’s use of Twitter to manipulate the market, but we can’t lose sight of where it comes from. Don Corleone might have been a benevolent benefactor for his family and associates, but those who crossed The Godfather suffered for it.
We’re obviously not suggesting that Musk is going to start leaving severed horse heads in the beds of Shiba Inu holders. It’s just a reminder that even in a decentralized market without government oversight, there should be some measures in place to protect investors.
It is highly possible that Musk’s cavalier attitude towards market manipulation and unwillingness to moderate his behavior may force companies and governments to implement tighter controls over cryptocurrencies. It would be unfortunate if one man’s behavior ruined a truly free market for everyone else.