DOGECoin surges 35% as Elon Musk’s Twitter deal approaches close.

• DOGECoin, the cryptocurrency branded after a viral dog meme from 2013, is up 35% since Monday as Elon Musk’s deal to buy Twitter approaches a close.
• The token price often moves in lockstep with comments made by the Tesla CEO.
• DOGE is up 10% in the last 24 hours after the SpaceX chief changed his Twitter bio to “Chief of Twit” on Wednesday.

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DOGECoin, the cryptocurrency branded after a viral dog meme from 2013, is up 35% since Monday as Elon Musk’s deal to buy Twitter approaches a close.

The token price often moves in lockstep with comments made by the Tesla CEO. DOGE is up in the last 24 hours after the SpaceX chief changed his Twitter bio to “Chief of Twit” on Wednesday. Similarly, the meme token saw a price surge in April when Musk first floated the idea of adding DOGECoin as a payment method for Twitter’s subscription service, Blue. It also saw a sell-off in June as Musk tried to back out of the purchase.

But following a monthslong battle between Musk and Twitter over the sale, all signs point to Musk closing the deal by his deadline of 5 p.m. on Friday. The alternative is Musk facing trial in a Delaware courtroom.

The price surge in DOGECoin — pronounced “doje coin” with a soft “g” sound — also coincides with rumors that Twitter is prototyping its crypto wallet.

Jane Manchun Wong, a popular tech blogger known for her prescient calls in the space, tweeted on Monday that Twitter was “working on a ‘wallet prototype’ that supports ‘crypto deposit and withdrawal.’”

We don’t know which kind of cryptocurrency will be supported yet or which network,”

Twitter has not announced a cryptocurrency wallet product. Still, the social media company did roll out a tipping feature last year, which allows users to send creators bitcoin via the platform. In February, Twitter added ether to its tips function.

The Elon Musk effect

It isn’t apparent when or why DOGECoin captured the heart of Elon Musk. The billionaire Tesla and SpaceX CEO has spent years talking up the token. 

Musk’s tweets with sometimes oblique references to DOGECoin have often sent it to new record-high prices. These posts have also helped drive retail investor interest.

“You have this one guy who is sort of like the cult leader,” said Asheesh Birla, a Ripple general manager who manages an alternative cryptocurrency used for payments.

Musk, however, isn’t alone in his celebrity endorsement of the animal-branded token. Dallas Mavericks owner Mark Cuban, Snoop Dogg, and Kiss bassist Gene Simmons have all publicly rallied behind DOGECoin. Even beef jerky brand Slim Jim got in on the action at one point.

DOGE’s price surge in 2021, attributed by one analyst to the run-up to Musk’s “Saturday Night Live” appearance on May 8, 2021, even managed to crash Robinhood’s trading app.

But there was more to DOGECoin’s record price run than celebrity backing. The enduring sentiment has also been to “stick it” to the establishment. 

“DOGECoin is like this kind of big F-U to the system,” said Avi Felman, Head of Trading at BlockTower Capital. “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 pushing up this message of, ‘Why can’t DOGECoin have value?’” said Felman of Doge’s 2021 price rise. “People like these narratives. They like these stories. They like these jokes. And DOGECoin just captured the mind and imagination of every single retail investor.”

“You have a rabid online community,” Birla said of the fan base of doge evangelists.

In 2013, software engineers Billy Markus and Jackson Palmer launched the satirical cryptocurrency to make fun of Bitcoin and the many other cryptocurrencies boasting grand plans to take over the world. 

“You have Twitter and Reddit, where they’re all sort of congregating and thinking about how to pump DOGECcoin,” said Birla.

Valuing DOGECoin

The question of whether DOGECoin holds value is debatable.

At the moment, there are very few use cases for the token. Though more merchants began to accept dogecoin as a payment method last year, it is nowhere near the level of adoption necessary to be used as an actual currency substitute. 

“These days it’s all one big marketing ploy,” Mike Bucella, BlockTower Capital general partner, previously told CNBC.

Unlike rival cryptocurrencies such as BTC or ETH, which lets programmers build applications on their platform to lend and borrow money, there isn’t much anyone can do with DOGECoin.

DOGECoin isn’t a reliable store of wealth, as this typically requires a certain degree of long-term faith in the coin and the blockchain upon which it’s been built. 

“If you look at the Dogecoin protocol itself, I don’t even know if there’s anyone over the last several years who has added new functionality or code to it,” said Birla. “DOGECoin doesn’t have a development team behind it.”

Given these limitations, the run-up in DOGECoin appears to be purely speculative. DOGECoin has value because other people believe it has value — and because they think someone else is willing to buy it from them at a higher price.

Disclosure: “Saturday Night Live” is a TV show of NBCUniversal, the parent company of CNBC. CNBC owns the exclusive off-network cable rights to “Shark Tank,” which features Mark Cuban as a panelist.

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