The Dogecoin (CRYPTO: DOGE) price is going nuts.
The meme token, with a Shiba Inu as its virtual mascot, is up 13% over the past 24 hours, currently trading for 14.2 US cents (22.3 Aussie cents).
That puts the crypto, originally created as a joke, up 125% since this time last week.
By comparison, the Bitcoin (CRYPTO: BTC) price has gained 2% over the week and the S&P/ASX 200 Index (ASX: XJO) is up 3% since last Wednesday's closing bell.
With the past week's gains in the Dogecoin price, the token now commands a market cap of US$18.95 billion, making it the eighth biggest coin in virtual circulation.
Mind you, though, that like most every crypto, Dogecoin is still trading well below its all-time high price of 73.8 US cents, reached on 8 May last year.
Still, you're unlikely to hear crypto investors complaining about the past week's phenomenal rally.
So, what's going on?
Image source: Getty Images
Why is the Dogecoin price rocketing this week?
For an answer to this riddle, we need to look no further than Elon Musk, the world's richest man and new owner of Twitter.
Musk is a big supporter of cryptos, including Dogecoin. In the past year, his tweets and comments have had the power to send the Dogecoin price soaring or tumbling, depending on the context.
Crypto investors have been keeping a keen eye on the developments over at Twitter, as Musk has signalled Dogecoin could potentially be used to pay for transactions on the social media site.
Adding fuel to the rally, yesterday Musk tweeted an image of a Shiba Inu wearing a Twitter themed t-shirt.
Commenting on the rally in the Dogecoin price, eToro analyst Simon Peters said, "Dogecoin saw an enormous price spike over the weekend on the back of Elon Musk completing his acquisition of Twitter."
However, he cautioned investors should treat "the Musk bounce" with care.
"Although it is perfectly conceivable that Musk's move has altered the investment case of the token, if you look at other businesses such as Tesla, adoption has been limited," Peters said.
Investors should also be prepared for some significant volatility.
Over the past month alone, the Dogecoin price has traded as low as 5.6 US cents and as high as 15.7 US cents.
