2022 continues to be a year of surprises, one of the biggest so far is Elon Musk’s decision to acquire social media giant Twitter for a whopping $44 billion. While the takeover set in motion a number of debates, especially those related to big tech censorship, it also cast doubt on the future of Dogecoin (DOGE), a digital currency that the billionaire has been a big supporter of over the past years. a couple of years.
To put the situation in perspective, just a few hours before Musk tweeted that the “bird released” on October 27, the price of DOGE fluctuated around $0.07. However, by November 1, it rose to $0.16, bringing the total market capitalization of the so-called memcoin to a significant $21 billion. And while DOGE is currently trading close to $0.08, its 30-day gains are over 40%.
It’s also worth noting that every time Musk tweeted in support of the digital asset, its value skyrocketed. For example, throughout 2021, he continued To refer to DOGE as “the people’s cryptocurrency,” a message that boosted the value of the currency by a whopping 4,000% within a year.
What’s more, Tesla — the American multinational automotive and clean energy company led by Musk — began accepting DOGE as payment for its products in January 2022, including “Giga Texas” belt buckles and miniature car replicas. In addition, the recently released Burnt Hair Masque joke flavor was also available for DOGE.
A bleak future for DOGE?
To better understand whether Musk’s takeover of Twitter and continued support for DOGE would have an indelible mark on the digital currency’s financial future, Cointelegraph turned to Lior Yaffe, co-founder of Swiss blockchain software company Jelurida. Jaffe doesn’t have much faith in Dogecoin, judging by the poor decision making shown by Musk so far, adding:
“From overpaying for Twitter to company-wide chaos, laying off many good employees and making terrible management decisions like the blue check episode, I am not optimistic about either Twitter or Dogecoin.”
In addition, he stated that he would be surprised if Musk could come up with any real use cases for Dogecoin, noting that even if Musk intends to somehow integrate Twitter with cryptocurrency payments – which is a very difficult task – he doubts that they will be able to achieve such a dream in the near future. “Even if they manage to build a payment system based on Twitter, there are much better blockchain solutions than Dogecoin in terms of security, privacy, smart contracts and scaling,” he said.
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Henry Liu, CEO of cryptocurrency exchange BTSE, told Cointelegraph that given the current macro environment, he foresees that the price of DOGE will continue to be highly volatile, much in line with the crypto market.
“We expect DOGE to remain speculative in the short term and liquidity and trading volumes across the various platforms should decline. If DOGE can gain new utility regarding its collaboration with Twitter, we can foresee the surge generated by social media communities,” he said.
Not everyone is so skeptical
Nikita Zuborev, chief analyst at cryptocurrency exchange BestChange, told Cointelegraph that while it cannot be discounted that the rise in meme tokens often comes suddenly and unreasonably, Musk’s recent acquisition of Twitter could potentially boost the price of DOGE, mainly because one cannot rule out such opportunity. an asset integrated into the firm’s social network ecosystem in the future. He added:
“If this happens, then the previously worthless memcoin will evolve into a sort of central platform governance token, reaching a huge audience in the process. Such a transformation could bring multiple use cases to the coin, which many investors are betting on.”
To further strengthen his argument, Zuborev pointed to the upcoming launch of the SpaceX-backed Doge-1 lunar satellite, which is directly related to the brand of the coin. “Such actions can provoke strong demand in the DOGE market and price growth,” he said.
At the same time, he acknowledged that as long as the main selling point of the asset remains based on his memocentric view, it would be wise to add currency to your portfolio just to diversify it. However, as an investment in its own right, it doesn’t give DOGE much merit.
“In addition to Dogecoin, Musk has repeatedly spoken positively about bitcoin, a cryptocurrency that is much more stable and can be easily integrated into the Twitter ecosystem. It can be seen as an alternative to DOGE, especially to capitalize on Musk’s ongoing market manipulation,” he said.
The benefits of DOGE are minimal so far, and that’s a fact
Thanks to Musk’s affinity for Dogecoin and his recent takeover of Twitter, it goes without saying that price speculation will spiral out of control, at least for a while longer. That being said, the fact remains that Dogecoin as a crypto project is still quite limited in its operational usefulness, a view shared by Daniel Elsawi, co-founder and CEO of decentralized exchange TideFi.
Taking a more holistic view of the matter, he told Cointelegraph that cryptocurrencies in the digital asset space today fall into two distinct categories: those that have smart contract capabilities and those that don’t. In his opinion, the market as a whole is moving towards the tokenization of the objects of our everyday life, and this is precisely what tilts the adoption curve of digital assets in one direction or another. He added:
“Given that DOGE cannot directly interact with smart contracts as part of its original design, I would argue that unless it is used specifically as a payment option, the use cases associated with it will remain speculative.”
Finally, given that the crypto industry is still in its infancy, it is still heavily dependent on bitcoin (BTC), tracking its price movements quite heavily. Moreover, volatility continues to dominate the market due to the recent fall of the FTX cryptocurrency exchange, which will have a direct impact on the price of most cryptocurrencies in the near and medium term. “Dogecoin is no different in this respect. There is still a lot of uncertainty around this asset,” Elsawi concluded.
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As we approach a future driven by high levels of economic turbulence in multiple financial sectors, it will be interesting to see how the future of Dogecoin plays out in the future, especially as projects with limited use cases continue to be destroyed. from the market, it would seem, every day.