It was one of the most heavily traded cryptocurrencies earlier this year, however Dogecoin (CRYPTO: DOGE) hasn’t been a good investment lately, falling around 75% from its May high. The dog coins showed some signs of life today, however, up 5.5% in the last 24 hours at 3:00 p.m. ET, according to CoinMarketCap. That modest jump is likely related to strong returns in the broader cryptocurrency market today. But there’s another reason it’s up.
Elon Musk is the CEO and founder of Tesla, although he prefers to refer to himself as Tesla’s “technoking”. And sometimes he even has another affectionate title: Dogefather, so called because of his explicit love for Dogecoin. And this morning around 2 a.m., the Dogefather again expressed his love for Dogecoin on social media.
It started with an exchange on Twitter when Twitter founder Jack Dorsey – a crypto enthusiast himself – spoke about how some cryptocurrency projects are more decentralized than others. Dorsey then tweeted that he was not “anti-ETH,” a reference to ether. Musk replied, unsolicited, “That’s why I’m pro Doge.” The trading volume for Dogecoin increased immediately after Musk’s tweet.
It should be noted that with Dogecoin, Musk doesn’t seem to ignite the level of volatility it had at the start of 2021. Dogecoin gave back some of its winnings not long after Musk’s initial boost. The bigger gains today coincided with a strong performance in the broader cryptocurrency market, including Bitcoin which rose quickly from around $ 48,500 to briefly topped $ 51,000.
Cryptocurrencies tend to move up and down as a package for a short period of time. As long-term investors, however, we are looking for cryptocurrencies that have the greatest potential for long-term acceptance. Dogecoin could go up some days as use cases and adoption increase. However, I believe that is not why Dogecoin was in the market today. Therefore, investors should not view today’s price development as a confirmation or negation of an existing investment thesis. Today’s news can safely be dismissed as irrelevant to long-term investors.
This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all reflect critically about investing and make decisions that will help us get smarter, happier, and richer.