A few days ago, everyone who entered his Twitter account was surprised to find a dog logo instead of the classic blue bird. What happened? Billionaire Elon Musk, current CEO of Twitter, arbitrarily and unilaterally replaced the main logo with that of the Dogecoin cryptocurrency.
As a result, the Dogecoin price broke above $0.10 and reached its highest level in 4 months. Voices against it also arose, because after these types of actions, Musk is being accused of manipulating the price of this cryptocurrency and making it grow artificially in a short period of time.
The problem is that it is not the first time that Elon Musk has resorted to this same tactic. In 2021, a SpaceX mission (another of his companies) was fully funded by Dogecoin. Even Tesla accepts payments with this cryptocurrency on some products. Considering that Musk now runs Twitter and is one of the most followed people on social networks, he is aware that any mention of Dogecoin generates movements in the market that also benefit him financially.
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Fernanda Juppet, CEO and lawyer of the exchange platform CryptoMarketexplains why this practice is negative for the ecosystem:
Market manipulation risk: By carrying out interventions of these characteristics in a company in which he has a direct interest, Musk causes artificial changes in the market, which do not reflect a real interest in the acquisition of the crypto asset. In this way, the change of the Twitter logo causes a greater demand for Dogecoin based only on speculation, that is, it opens spaces for investors with large amounts of this cryptocurrency to increase their profits by selling to non-expert investors, who suffer significant damage. when asset prices adjust.
In 2021, a SpaceX mission (another of his companies) was fully funded by Dogecoin. Even Tesla accepts payments with this cryptocurrency in some products
Increased volatility: Massive speculation with Dogecoin can cause an increase in the volatility of the value of the cryptocurrency and affect the market as a whole. “It will be difficult for investors to know when is the best time to buy or sell because they will be at the mercy of information asymmetries caused by a relevant market player, when the natural thing is that the price is governed by supply and demand What’s more, this is why manipulating market prices in shares or other regulated assets is a crimeJuppet explains.
Loss of confidence in cryptocurrencies: If massive speculation with Dogecoin causes huge losses for people, this can harm the crypto ecosystem as a whole. “Many investors may end up moving away from cryptocurrencies without realizing their potential to promote financial inclusion as an inflation haven, investment tool, and/or remittance transfer, as these activities directly affect the credibility of the ecosystem as a whole.“, comments the CEO of CryptoMarket.
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Although Musk’s lawyers argue that the effects are minimal, we know better. Her constant mentions of Dogecoin have made her one of the strongest since she started promoting it.
According to CoinMarketCap.com, Dogecoin is the eighth most valuable cryptocurrency, with a market capitalization of more than $13 billion. “It is very good that it reaches a prominent place, each cryptocurrency has a differentiating project behind it that seeks to attack a specific need. The problem is when its growth occurs on the basis of speculation that ends up damaging confidence in the market, instead of goods and services through which value is created.“Juppet concludes.
