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Dogecoin (DOGE-USD) is now the 12th largest cryptocurrency, according to Coinmarketcap. It has a market value of more than $17.3 billion. As I argued last week, if Elon Musk’s bid for Twitter (NYSE:TWTR) actually closes, this could significantly benefit Dogecoin.
That is highly likely since Musk has been one of the most significant backers of Dogecoin in the past. In fact, at one point, Musk provided capital (and may still be) for the de facto developers of Dogecoin blockchain protocols and software development. Jared Birchall, a former Morgan Stanley (NYSE:MS) executive and a close associate of Elon Musk, is one of the four advisors to the Dogecoin Foundation. Moreover, he is the managing director of Musk’s family office, Excession.
You can probably bet that Musk is going to make full use of his enthusiasm for Dogecoin with Twitter. For example, Tesla (NASDAQ:TSLA) where Musk is the CEO, as he will be at Twitter, already accepts Doge crypto and no other cryptocurrency. Tesla makes that really clear on its website, as it refuses to accept even Bitcoin and even stablecoins.
In fact, Musk has already tweeted that the Twitter Blue subscription fee should accept Dogecoin as a payment option.
Musk has made it clear that he considers himself the crypto’s “Dogefather.” A year ago, on May 8, 2021, he appeared on Saturday Night Live and did a skit about Dogecoin. At the time he called it a “hustle.”
But since then he has continued to tout DOGE crypto. In fact, Forbes magazine said he was asked about regrets over “sparking a storm of excitement over dogecoin and where it’s gone.” Musk replied that he still likes both dogs and memes.
Where This Leaves Investors in Dogecoin
As of May 7, the price of DOGE-USD was 13 cents, down 4.3 cents from 17.3 cents from the end of 2021. That represents a drop of 24.9% from December 31. But on the other hand, this implies that the crypto would have to rise by 33% from today’s price.
Moreover, Dogecoin is down significantly from its prior heights during 2021. A year ago, on May 6, 2021, Dogecoin peaked at 68.48 cents, with a peak market capitalization of $88.68 billion. We can use this to project where Doge crypto could rise in the future.
For example, let’s assume that a combination of 10% of Twitter’s $5.95 billion in sales and other companies brings the total Dogecoin volume to $600 million. Therefore, at 50 times sales Dogecoin could attain a $30 billion market cap. That represents a 73.8% gain over Dogecoin’s $17.258 billion market cap today.
As a result, we could see a situation where Doge crypto could rise 73.8% over its price of 13 cents today to $0.226 cents. That is still well less than half of its previous peak in May 2021 but shows that it’s possible Dogecoin could rise much further.
On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.