DOGE Prices Rocket 25% Following Elon Musk’s Big Tesla Promise. What to Know.

Dogecoin (CCC:DOGE-USD) has jumped 25% higher today after electric vehicle maker Tesla (NASDAQ:TSLA) said it will accept payment in the cryptocurrency for some merchandise.

A close-up shot of a Dogecoin (DOGE) concept token.

Source: Shutterstock

In a series of tweets, Tesla CEO Elon Musk said that some of the automaker’s “merch” can now be purchased with Dogecoin. Its merch includes the $150 Giga Texas belt buckle featuring the carmaker’s logo. “See how it goes,” Musk tweeted.

Dogecoin rose to a high of 20 cents after the tweet before falling back to 18 cents. Musk’s comments are a positive development for DOGE, which has slid 26% since Nov. 1 and has been struggling to remain above 20 cents.

What Happened With Dogecoin Prices

In addition to his tweets about accepting DOGE for payment of some Tesla merchandise, Elon Musk also said in a media interview that he believes Dogecoin has more utility as a means for payment than Bitcoin (CCC:BTC-USD). Though he didn’t elaborate, that comment, along with Musk’s tweets, was enough to push Dogecoin prices higher on heavy trading volume. Musk’s tweets about Dogecoin have contributed to its price rising at various times throughout this year.

In the spring, prior to his appearance on Saturday Night Live, Musk’s tweets about Dogecoin sent its price to an all-time high of 73 cents. DOGE has since fallen 71% from that peak, though fans of Dogecoin continue to trumpet the goal of pushing its price as high as $1. News that Tesla will accept Dogecoin for the purchase of some merchandise comes as Musk sold another 934,091 shares of Tesla stock worth $906.49 million to help pay a hefty $15 billion tax bill he faces, and as TIME magazine  named Musk their 2021 “Person of the Year.”

Why It Matters

Musk’s bullish comments about DOGE are one of the few things the cryptocurrency has going in its favor. Known as the world’s first meme coin, Dogecoin features a cartoon image of a Shiba Inu dog and nothing else.

The main knock on Dogecoin is that, unlike Bitcoin (CCC:BTC-USD), which many merchants accept, or Ethereum (CCC:ETH-USD), which can be used in decentralized finance (DeFi), DOGE has no underlying utility or function. Musk’s comments about Dogecoin, which have included calling his interest in the digital asset a “hustle,” have been largely responsible for propping up the digital coin.

That Tesla is now going to accept Dogecoin as a legitimate form of payment is a concrete step forward and puts Musk’s words into action for the first time related to the cryptocurrency.

What’s Next for DOGE?

The boost that Dogecoin prices are getting from Elon Musk’s latest comments looks likely to be temporary as the price of the cryptocurrency is already slipping back below 20 cents. And given its lack of function, the long-term outlook for Dogecoin’s price remains uncertain. Despite the fact that Tesla will allow consumers to buy some of its merchandise with DOGE, the cryptocurrency continues to be highly speculative and risky.

Investors wanting exposure to cryptocurrencies have many more legitimate options available to them, including recently created exchange-traded funds (ETFs). Be careful with Dogecoin.

On the date of publication, Joel Baglole did not have (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 Publishing Guidelines.

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