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The Elon Musk announcement that Tesla will accept Dogecoin as merchandise payment has sent the meme crypto’s price surging by 25%.
The Dogecoin (DOGE) price experienced a massive 33% gain after Tesla Inc (NASDAQ: TSLA) CEO Elon Musk announced that the electric vehicle maker would start accepting the crypto as payment for its merchandise. Musk tweeted:
“Tesla will make some merch buyable with Doge & see how it goes.”
Musk’s tweet follows fellow DOGE aficionado Mark Cuban’s decision early this year to start accepting the asset as payment. In March, the tech investor and owner of the Dallas Mavericks announced that the NBA team would accept DOGE as merchandise payments.
The price of Dogecoin first spiked to $0.20 in light of Musk’s tweet, eventually cooling off to $0.18. In addition, there is talk in some quarters that Musk’s announcement could point to a grander scheme of things.
At the moment, many believe that Tesla may soon begin to accept DOGE as payment for car purchases. Earlier this year, the electric car company announced plans to accept Bitcoin (BTC) but eventually reversed the decision. This was primarily due to the damaging environmental impact that BTC mining causes. However, with DOGE, Musk believes the meme currency provides a better holistic value than BTC, and has a much higher potential. As the billionaire recently put it:
“Fundamentally, Bitcoin is not a good substitute for transactional currency. Even though it was created as a silly joke, Dogecoin is better suited for transactions.”
Musk also explained that BTC had a low transaction volume coupled with a higher cost per transaction. By comparison, DOGE offered a comparatively higher transaction volume flow than BTC.
Elon Musk Has Been a Key Proponent of the Dogecoin Price Movement This Year
This year, DOGE and Shiba Inu (SHIB) benefitted from sporadic Elon Musk tweets on several occasions. However, in recent months, the price of the digital currency has been trading mostly in a stable range. In addition, since November, DOGE has been trading on a downward trend – with lower highs. Despite receiving a much-needed boost from Musk’s tweet, DOGE is still some way off its blazing high of $0.722320 recorded in May.
Sometime in October, Musk also proclaimed that he only owned BTC, ETH, and DOGE in his crypto portfolio. This is despite the fact that he sometimes tweets about a wider range of digital currencies. The Tesla CEO also added that his perceived affinity for DOGE came about from hearing his employees often talk about it. As he put it:
“Lots of people I talked to on the production lines at Tesla or building rockets at SpaceX own Doge. They aren’t financial experts or Silicon Valley technologists. That’s why I decided to support Doge — it felt like the people’s crypto.”
Musk also intimated that he does not believe that digital currencies will fully replace fiat currencies. However, he added that he sees DOGE dominating the crypto payments space due to its inflationary nature. Musk says that this feature will encourage people to spend the asset rather than hodl.