A mere mention on TV would give dogecoin (DOGE) huge mainstream exposure. But April’s “Dogeday” flop suggests the “Elon effect” may be priced in.
Only in the looking-glass world of 2021 could a late-night comedy show have the potential to move markets. Dogecoin fans are hoping for another price surge this weekend when Elon Musk, co-founder of Tesla and SpaceX, hosts the U.S. television program “Saturday Night Live.” Numerous fans have asked the billionaire entrepreneur to mention the meme-inspired cryptocurrency in one of his sketches. In a tweet last week, the billionaire Tesla CEO strongly hinted he would do so: “The Dogefather SNL May 8”.
The episode is scheduled to air at 11:30 p.m. Eastern time Saturday, or 03:30 UTC Sunday, on the NBC television network.
Why could this be a big deal for dogecoin?
Merely mentioning the dog-themed cryptocurrency on the air would give the digital asset significant exposure to a mainstream audience. So far, the 46th season of “SNL” has ranked as the number 1 U.S. comedy show in terms of viewers, with 4.1% of the American population aged 18-49 tuning in. So there’ll likely be plenty of people watching Musk and musical guest Miley Cyrus who haven’t come across dogecoin before (unless they caught Dallas Mavericks owner Mark Cuban promoting the currency on Ellen Degeneres’ daytime talk show recently).
Musk’s tweet set in motion a dogecoin rally that has sent prices skyrocketing 106% to a new all-time high of $0.69. New exchange listings on eToro and Gemini during the week have helped sustain the rally and allowed dogecoin to overtake XRP as the fourth-largest cryptocurrency by market capitalization.
The question now is, will Musk’s TV appearance deliver on expectations and help drive dogecoin to new heights, or will the social media-driven hype fall flat as it did during last month’s anti-climatic “Dogeday”?
Wait, why does Elon Musk like dogecoin so much?
Musk’s involvement with dogecoin dates back to September 2018, when he publicly enlisted the help of dogecoin creator Jackson Palmer to stop scammers spamming his Twitter posts.
Seven months later, Musk won an April Fool’s Day poll to become the project’s new “CEO” and responded with his first-ever dogecoin-related tweet, “Doge might be my fav cryptocurrency. It’s pretty cool.” And so the Musk-dogecoin love affair began.
Since then, the Tesla CEO has tweeted numerous references and memes related to dogecoin and consistently sent prices soaring to higher levels. But it’s not just doge prices that are susceptible to the “Elon effect.” Two spikes in Google searches for “dogecoin” this year coincided with Musk mentioning the cryptocurrency on his social media feed.
The first was in January during the Wallstreetbets stock-trading frenzy which, perhaps inevitably, spilled over to the Shiba Inu-themed cryptocurrency and got supercharged by Musk tweeting an image of a dog on the cover of “Dogue” magazine. The second took place in April right around the time Musk published a post stating “SpaceX is going to put a literal Dogecoin on the literal moon.”
Dogecoin vs. bitcoin; what are the risks?
Despite its popularity, soaring price and celebrity endorsements, there are a number of risks associated with buying and holding the parody cryptocurrency compared to holding something like bitcoin (BTC):
- Unlimited supply: Unlike bitcoin and many other cryptocurrencies, dogecoin does not have a fixed supply. This means prices are not supported by scarcity and rely on buyers constantly buying new dogecoin that enters circulation to maintain its value.
- High issuance rate: Dogecoin has a fixed block reward where successful miners receive 10,000 dogecoins every minute, compared to bitcoin where miners receive 6.25 bitcoin every 10 minutes (until the next halving of that rate occurs sometime in 2024). Ultimately, this means more dogecoins enter circulation in two days (28 million) than bitcoin’s total supply (set to top out at 21 million around the year 2140).
- Infrequent tech development: Dogecoin’s tech development is maintained by a team of voluntary developers who, until recently, had submitted relatively few code updates and releases. Before the latest Dogecoin Core 1.14.3 release in February, the last update was released in November 2019.
- Concentrated ownership: According to data by IntoTheBlock, there are nine wallets that collectively hold more than 40% of all dogecoin, with one wallet holding 28%. This means that at any moment one of these whale investors could cash out and send the price plummeting, or alternatively could use their huge position to manipulate the market. In contrast, there is only one active bitcoin wallet that holds just over 1% of the entire supply.
Yet, in spite of these flaws and the fact that dogecoin is at its heart a joke cryptocurrency, it continues to outpace almost every other digital asset in the market and garner worldwide attention. So will dogecoin go to the moon? Well, one could argue it’s already there.