Why Dogecoin is soaring today

Elon Musk is giving Dogecoin another big boost.

| More on:
A cartoon graphic of a dog with virtual coin in mouth.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Dogecoin (CRYPTO: DOGE) is making big gains in today's trading. The popular, meme-themed cryptocurrency was up roughly 7.2% over the previous 24-hour period as of 12:15 p.m. ET Sunday.

Tesla CEO Elon Musk purchased a 9.2% stake in Twitter recently, making him the social media company's largest shareholder and resulting in him joining the company's board soon after. Yesterday, Musk made comments stating that he believed that users should be able to pay for the Twitter Blue premium subscription service with Dogecoin, and his comments have prompted big gains in the token's price. 

So what

Dogecoin has been making gains lately despite bearish pressures impacting the broader crypto space. It's one of the very few top-100 tokens to be in the green over the last week, and investors in the popular meme token can once again thank Tesla's Elon Musk for the pricing gains. 

Musk has been one of the most high-profile champions of the cryptocurrency, and the influential tech figure has said that it's one of only three cryptocurrencies he owns -- along with Bitcoin and Ethereum

Now what

Outside of pure speculation and market momentum, increased user adoption and payment use cases are one of the main factors that could work to drive the price of Dogecoin higher. However, there are still some reasons to be skeptical of whether Dogecoin and other cryptocurrencies actually make much sense to use as currencies. Volatility in the crypto space has opened the door for explosive gains and made some investors very rich, but the tendency for big token pricing swings comes with problems.

For example, if a user thought that the price of Dogecoin was going to go up even moderately from its price at a given time, they probably wouldn't have much reason to use it to purchase Twitter Blue. Alternatively, companies that accept Dogecoin and other volatile cryptocurrencies as payment are effectively gambling that the price will increase, rather than decrease substantially. 

The fact that Dogecoin has a questionable utility as a currency doesn't necessarily mean that its token price won't climb significantly above current levels, but there's still uncertainty about whether businesses accepting it as payments will prove to be a bullish catalyst. Investors should understand that the token remains a high-risk, high-reward play. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin, Ethereum, Tesla, and Twitter. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 

More on International Stock News

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Nvidia share price slips despite 94% revenue growth

Q3 earnings beat expectations, but what about guidance?

Read more »

high, climbing, record high
International Stock News

Could the S&P 500 Index hit 6,500 by the end of 2025?

Could the index climb higher?

Read more »

a small child holds his chin with his head on the side in a serious thinking pose against a background of graphic question marks and a yellow lightbulb.
International Stock News

Is it too late to buy Nvidia shares?

Is Nvidia stock a buy ahead of its third-quarter earnings report tomorrow?

Read more »

a group of people stand examining a large glowing cystral ball held in the hands of one of the group members while the others regard it with various expressions of wonder, curiousity and scepticism.
International Stock News

Here's what to expect from Nvidia on November 20

Can Nvidia score another win?

Read more »

Two people lazing in deck chairs on a beautiful sandy beach through their hands up in the air.
International Stock News

2 no-brainer Warren Buffett stocks to buy right now

While replicating Buffett's success isn't possible, there are a handful of his investments that are no-brainer buys.

Read more »

A man with a beard and wearing dark sunglasses and a beanie head covering raises a fist in happy celebration as he sits at is computer in a home environment.
International Stock News

3 reasons to buy Nvidia stock before November 20

This week marks a big moment for tech investors as perhaps the most anticipated earnings of the year will be…

Read more »

A woman smiles over her shoulder as she sits in the driver's seat of a car with keys in hand.
International Stock News

Why Tesla stock just popped

Tesla stock raced ahead Monday after Bloomberg reported the incoming Trump administration's intentions around self-driving vehicles.

Read more »

A woman holds her hand out under a graphic hologram image of a human brain with brightly lit segments and section points.
International Stock News

Prediction: Nvidia stock is going to soar after November 20

Nvidia is scheduled to report third-quarter earnings on Wednesday.

Read more »