The Twitter (NASDAQ:TWTR) deal spread might be indicating that the markets have some uncertainty about Elon Musk closing the $44 billion deal. However, Elon already seems to have a strong backing from banks to close the deal. With the Tesla (NASDAQ:TSLA) chief executive officer (CEO) buying the social media company, I would consider accumulating Dogecoin (DOGE-USD). It is worth noting that cryptocurrencies, in general, have been depressed in the last few months. A key reason is the possibility of multiple rate hikes and liquidity tightening. This would imply flow of speculative money out of risky asset classes.
In April 2021, Musk proposed Dogecoin as a payment method for Twitter Blue premium subscribers. Once Musk completes the acquisition of Twitter, it is entirely likely this will happen. This is an impending catalyst for the meme coin.
This temporary downturn for cryptocurrencies presents a good opportunity to accumulate some quality coins or tokens. With the news of Musk offering to buy Twitter, Dogecoin surged to 17 cents. However, with negative broad market sentiments, the meme coin has trended lower to 13 cents. Current levels seem attractive for accumulation and I would not be surprised if Dogecoin surges by 100% in the next 12-months.
Recent data suggests that whale transactions have reached a four-month high for Dogecoin. Clearly, big investors are betting on the digital currency with Musk’s backing. The coin is already being accepted to buy selected Tesla merchandise. Additionally, Tesla’s supercharging station will also be accepting the cryptocurrency as a mode of payment. Moreover, last year, Musk’s SpaceX accepted Dogecoin as a payment method to launch “DOGE-1 Mission to the Moon.” The key point here is that as more companies accept Dogecoin as a payment method, the meme coin adoption will increase. Among meme coins, Dogecoin already has the highest number of holders.
I must also mention here that Dogecoin stands to benefit from wider crypto adoption. It is expected that the number of crypto holders will surge to one billion by the end of 2022. This could help Dogecoin trend higher.
At the same time, it is worth noting that the meme coin already trades at a market capitalization of $17 billion. It might be unrealistic to expect multi-fold returns from current levels. However, Dogecoin is among the few meme coins that is expected to survive in the next few years. On the flip-side, Dogecoin is inflationary, while Shiba Inu (SHIB-USD) is deflationary. This factor can be offset by wider adoption and by bigger entities accepting the digital asset as a payment method.
Overall, Dogecoin seems due for a reversal rally. It seems like Musk is the unofficial CEO for the meme coin. As long as he backs Dogecoin, I would remain invested.
On the date of publication, Faisal Humayun 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.
