Why Dogecoin Popped and Then Dropped Today

What happened

Dogecoin (CRYPTO: DOGE) rallied this morning on news that Tesla CEO Elon Musk was taking a 9.2% stake in Twitter. The news was only tangentially related to Dogecoin as Musk has been a big backer of the meme coin on Twitter.

After a pop this morning, which took Dogecoin up 6% in less than an hour, the cryptocurrency faded as there was no tweet or any comment from Musk on Dogecoin, as some might have expected.

As of 1:57 p.m. ET, Dogecoin was down 1.6%, while Twitter had skyrocketed 29.5%.

Person looking at a stock chart go up and down on a tablet.

Image source: Getty Images.

So what

Musk has not made any comment since the news of his Twitter stake in a Securities and Exchange Commission filing, saying only on Twitter, “Oh hi lol.”

The investment was an odd move for Musk, who doesn’t typically buy shares of other publicly traded companies, though the Tesla chief is a fan of Twitter as he frequently uses the platform to discuss some of Tesla’s projects and share observations and jokes. Dogecoin was a favorite talking point of Musk about year ago when the meme coin soared, and at one point he promised to put a “literal Dogecoin on the literal moon.”

Musk does own Dogecoin, and Dogecoin investors tend to see his backing as one of its biggest potential catalysts as Musk has 80 million followers on Twitter and is considered a visionary business leader as the head of Tesla and a co-founder of PayPal.

Musk hasn’t tweeted about Dogecoin since January, when he said he’d eat a Happy Meal on TV if McDonald’s accepted Dogecoin, and interest in the cryptocurrency has waned since the boom last spring.

Now what

Dogecoin’s spike today as a reminder of how fickle cryptocurrency investing can be, and that it’s often little more than rumor that lifts a crypto token on a given day, especially with meme coins like Dogecoin. Given that Musk’s investment in Twitter is really unrelated to Dogecoin, it’s not surprising that the cryptocurrency gave up those gains after the pop.

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Jeremy Bowman owns PayPal Holdings. The Motley Fool owns and recommends PayPal Holdings, Tesla, and Twitter. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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