Elon Musk backed Dogecoin surges after Donald Trump handed him new government efficiency department also called DOGE
Dogecoin has surged to reach its highest value in more than three years in the wake of the presidential election, gaining 12 per cent on Tuesday alone.
The cryptocurrency championed by Elon Musk has outpaced Bitcoin to rise from $0.15 to $0.42 in a matter of days - a jump of 180 per cent.
It comes as Elon Musk was nominated to head Donald Trump's new Department of Government Efficiency (DOGE) when he comes to office in January.
Musk, alongside entrepreneur and former Republican candidate Vivek Ramaswamy, will aim to cut federal spending by as much as a third after a 'complete financial and performance audit of the entire federal government, and making recommendations for drastic reforms', according to Trump.
'Dogecoin', Musk's preferred crypto token, originally refers to a viral image of a Shiba Inu dog, popular online from 2010.
Elon Musk speaks during a PAC Town Hall in Folsom, Pennsylvania, on October 17, 2024
A visual representation of the digital Cryptocurrency, Dogecoin (DOGE) is on display on November 12, 2024 in Paris, France
Dogecoin has climbed significantly since the election, and at a faster rate than Bitcoin
Dogecoin, launched three years later, has been promoted as a 'fun and friendly internet currency' and acknowledges its origins as a 'joke'.
The crypto was intended to make fun of other cryptos as Bitcoin came to the fore, but grew in popularity - and even went on to sponsor a soccer team in the UK.
It is not clear why Musk took interest in the currency, but he has continued to make reference to the meme in posts on X, which he bought in October 2022.
Dogecoin's popularity surged ahead of Musk's SNL performance in 2021, which one analyst linked to the billionaire Tesla CEO.
'Dogecoin is like this kind of big F-U to the system,' Avi Felman, Head of Trading at BlockTower Capital, told CNBC at the time.
'It's like, "Yeah, this thing can have value, too. And I'm just going to buy it, because I'm going to buy it."'
'Elon is basically pushing up this message of, "Why can’t dogecoin have value?"' said Felman.
'It’s part of the GameStop boom. People like these narratives... they like these jokes.'
Ahead of the US election, some investors again predicted that a Trump win would help Dogecoin in light of Musk's support of the Republican candidate.
Since the election, Musk has reportedly been holed up at Mar-a-Lago as Trump considers his staffing choices.
Trump had already floated the idea of a new department to oversee federal spending under the watch of Musk.
As well as launching SpaceX, Tesla and other companies including the original X.com, later merging with Confinity to become PayPal.
After taking over Twitter in 2022, Musk cut staff by as much as 80 per cent in a push to reform the company in his vision.
Musk defended the layoffs saying he had no choice when the company was losing $4mn a day, having paid $44bn.
He said the cuts were needed to rein in expenditure and keep the company functional and efficient.
But insiders said they worried the cuts had affected their ability to do their jobs. Twitter suffered four outages in February 2023 alone - compared to nine in all of 2022.
Staff also said that due to cuts and changes to features, they could no longer protect users from trolling and child sexual exploitation, nor the rife disinformation Musk set out to combat.
'Nobody's taking care' of the work around safety measures now, an engineer told the BBC in March last year.
Musk contested some of these claims in the rare media interview with in April, saying there was less misinformation on the site since the takeover, helped by efforts to delete automated accounts.
Musk's own artificial intelligence model Grok assessed this month that 'based on various analyses, social media sentiment, and reports, has been identified as one of the most significant spreaders of misinformation on X since he acquired the platform'.
Fidelity estimated earlier this year that X is now worth 80 per cent less than when Musk bought it.
The original doge meme featured text over a photo of a Shiba Inu
Musk continues to share doge-related memes, and appears to back the cryptocurrency
As Dogecoin climbed to a three-year high, Bitcoin rallied to the verge of $90,000 on Tuesday, also riding the wave of euphoria since the election of Trump as U.S. president on expectations his administration will be crypto friendly.
The world's biggest cryptocurrency has become one of the most eye-catching movers in the week since the election and touched $89,982 - a gain of around 30% since November 5. It was last down 1.4% at $86,730.
Bitcoin is surging along with Musk's automaker Tesla , which is up nearly 40% since voting results rolled in, as investors figure Trump's friends and interests will do well while he is in office.
'The crypto enthusiasts think they have a like-minded incoming president,' said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
'The thing about bitcoin at the end of the day is that there is no valuation anchor to it, it's hard to get a grip on fair value. So when sentiment is very positive, it does get carried away a lot more than other asset classes.'
Trump embraced digital assets during his campaign, promising to make the United States the 'crypto capital of the planet' and to accumulate a national stockpile of bitcoin.
It is not clear how or when that could happen but the possibility drove a speculative surge in crypto mining and trading stocks.
'I think it increases the chances that other nation states buy bitcoin in a bid to front run the U.S.,' said Matthew Dibb, chief investment officer at cryptocurrency asset manager Astronaut Capital.
'Additionally I think it would be a crazy catalyst for the U.S. listed bitcoin miners ... given possibilities of such entities getting nationalized.'
Crypto miner Riot Platforms jumped nearly 17% on Wall Street on Monday. Fellow miners MARA Holdings and CleanSpark leapt nearly 30%.
Software company and investor in bitcoin MicroStrategy announced it had spent about $2 billion buying bitcoin between October 31 and Nov. 10. Shares rose 26% on Monday.
'Obviously (it's) a clear Trump trade as he is so supportive of the industry, and this can only mean more demand both for crypto stocks as well as the currencies themselves,' Nick Twidale, chief market analyst at ATFX Global in Sydney, said of the bitcoin rally.
'The fact that bitcoin was trading near all-time highs when the election result came through meant that it had clean sky above.'
Tesla and SpaceX CEO Elon Musk (R) jumps on stage as he joins Donald Trump during a campaign rally at site of his first assassination attempt in Butler, Pennsylvania on October 5
Musk joins Trump during a campaign rally in Butler, Pennsylvania on October 5
The euphoria extended across the crypto landscape with smaller tokens such as ether and dogecoin surging, although they dipped on Tuesday morning in Europe.
Crypto investors see an end to increased scrutiny under U.S. Securities and Exchange Commission Chair Gary Gensler whom Trump has said he will replace. Trump also unveiled a new crypto business, World Liberty Financial, in September.
'What we're seeing isn't just a price milestone; it's a signal that the market is warming to the idea of bitcoin as a more stable, even politically favoured, asset,' said Justin D'Anethan, head of Asia-Pacific business development at digital assets market maker Keyrock.
