What happened

Elon Musk is at it again, boosting the value of (arguably) his favorite cryptocurrency Dogecoin (CRYPTO:DOGE) by 13.3% as of 10 a.m. ET.

Today, the Tesla CEO announced on Twitter that "Tesla merch buyable with Dogecoin." Early reports suggest consumers will only be able to use Dogecoin to buy two items from the Tesla website: a belt buckle made to commemorate Tesla's gigafactory in Texas and a Tesla cyber-truck-themed whistle.

At the height of today's Musk-driven spike, Dogecoin moved more than 25% higher immediately following the tweet.

Musk's tweet is a continuation of his explicit support for the dog-inspired meme token. He previously tweeted that Dogecoin would be accepted for merchandise purchases in mid-December, which resulted in a similar 20% rally.

Shiba Inu dog in a doorway.

Image source: Getty Images.

So what

The relative lack of celebrity attention for Dogecoin of late has not been good for the cryptocurrency. Looking out over the past month, absent the two Elon Musk tweets, Dogecoin has remained on a downtrend. Thus, it's not surprising to see social media platforms filled with requests from retail investors for Elon to pump up their favorite token.

For bulls, having Elon Musk on team Dogecoin is a great thing. However, for those a bit more skeptical of the idea that any token can move by a double-digit percentage margin when it's used for what appears to be marginal use, there's perhaps some troubling aspects to how sensitive cryptocurrencies can be to tweets. And yes, even those of Mr. Musk.

Now what

The fact that five simple words on a social media platform can propel a meme token to rally in excess of 25% on a given day is certainly incredible to see. For those looking for a reason for Dogecoin to soar, perhaps this tweet could result in another momentum-driven rally higher.

That said, like all meme tokens, Dogecoin's speculative nature provides inherently higher risk to investors. Dogecoin remains among the most volatile digital tokens in the crypto world. For bulls who believe this tweet could lead to another momentous rally, that's a good thing.

However, most investors who value capital preservation and relative portfolio stability may want to sit on the sidelines and watch how this plays out. It's certainly something to behold.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.