Most investors who have followed Dogecoin (DOGE -2.98%) for any extended period of time know how important commentary from Tesla (TSLA -1.11%) CEO Elon Musk can be for the token's valuation.
At a visit to Tesla's gigafactory late last night, Musk noted to onlookers that he believes Tesla "should enable [Dogecoin as an official form of payment for its vehicles] at some point." He also gave the crowd a "Dogecoin to the moon!" nod, which was met with cheers.
Following these comments, Dogecoin soared more than 11% in the span of just 15 minutes, and hovered around the $0.19 range for most of this morning. However, as of 4 p.m. ET, Dogecoin has since dropped to around $0.17, still up over the past 24 hours by 1%.
Let's dive into what investors may want to make of this massive swing in Dogecoin today.
Volatility is the name of the game
Musk's comments come as various large-cap meme tokens are seeing momentum once again. To be honest, I would have expected to see a larger surge on this news, given the potential effect Dogecoin-facilitated Tesla purchases could have on the demand for the meme token.
That said, this pop and drop appears to be part of a longer cycle of Musk's comments leading to near-term trading swings, followed by profit taking in short order. Musk has made similar comments in the past, and while some Tesla merchandise can be bought using Dogecoin, any developments for crypto integrations with X Payments (and the ability to buy Teslas using Dogecoin) appear to be some time away. So, here we are.
Dogecoin will likely continue to trade in a volatile fashion, and I'd expect to see more momentum build in the coming days and weeks, should this rally in speculative meme tokens continue. That said, other smaller meme tokens are seeing much larger surges, likely due to their market capitalization size and the ability of traders to put on leveraged bets to influence their token prices to a greater degree. Thus, Dogecoin appears to be less viewed as a trading vehicle these days, and more viewed as a waiting game for some sort of big catalyst to come to fruition.
Will Musk really integrate Dogecoin in the way investors think?
Reading between the lines, it's my view that Musk is amused with Dogecoin and its core community. Since it seems to be a pet project of sorts (Musk famously has a Shiba Inu dog he named Floki, resulting in two new meme coins that are flying), if Dogecoin goes up, it makes him happy. He did reportedly invest in Dogecoin in the past, but it's unclear whether he holds any position at present.
Dogecoin may indeed be the "people's crypto," as Musk puts it. But it's also an asset with a valuation of nearly $25 billion that doesn't really do much. That fact doesn't seem to matter right now, and the party is on once again. Dogecoin investors will just have to wait to see whether Musk really follows through on these comments, or if there's ultimately nothing to see here.
