Dogecoin: The Comedic Craze – What’s Behind Its Rise?

Elon Musk is not just launching rockets; he’s also elevating other ventures to new heights.

Following a three-year downturn, dogecoin is experiencing a resurgence, climbing 250% since Donald Trump’s election – signifying a broader sense of optimism in the industry, largely linked to Trump’s interaction with cryptocurrency supporters during his campaign.

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Trump’s informal appointment of Musk to what he calls the Department of Government Efficiency – known as D.O.G.E – has further amplified the excitement surrounding the dog-themed meme coin.

This isn’t the first time Musk, who refers to himself as the “Dogefather,” has ignited interest in dogecoin.

In May 2021, its value exploded in anticipation of Musk’s guest spot on “Saturday Night Live.” In one sketch, Musk acted as a financial analyst, responding to a Weekend Update host persistently asking, “What is dogecoin?” After much evasion, Musk’s character eventually confessed it was a hustle, leading to a sharp drop in the coin’s price. Just over a year later, dogecoin had declined by more than 90% from its peak value.

This downturn significantly impacted small investors. In 2022, one such investor filed a class action lawsuit against Musk for purported market manipulation and insider trading, although the case was dismissed in August 2024.

What causes the volatility of dogecoin—a meme coin that was never designed to be taken seriously?

We’re all in this together

Introduced in 2013 as a satire of bitcoin and other cryptocurrencies aiming to disrupt conventional finance, dogecoin’s conception originated from two individuals globally who met online, replicated the code of an existing coin, and labeled it with the well-known Doge internet meme featuring a Shiba Inu dog and quirky phrases: “wow much coin.”

Although their original aim was to create a trivial and unattractive coin, it has morphed into one of the most popular and resilient cryptocurrencies available.

Following dogecoin’s rise in 2021, I analyzed how its enthusiastic network of influencers and everyday investors came together to generate considerable attention and investment in this joke currency.

Elon Musk’s 2021 appearance on ‘Saturday Night Live’ resulted in a significant fall in dogecoin’s price.

To understand the appeal of such absurd investments, one must acknowledge the time and effort users invest in these networks, along with the rewards—both monetary and social—that they receive in return.

Meme coins operate as collaborative initiatives. Participants in these online forums are financially motivated to promote enthusiastically: as the value of dogecoin rises, so does their investment. Additionally, they receive social recognition from fellow meme coin supporters for advocating the coin.

Essentially, each meme coin is supported by a community of individuals united in their common goal of generating wealth.

Proponents promote dogecoin and similar coins as crypto movements, shared journeys, and community-focused projects. Successful crypto ventures are marked by intricate trust networks, whether it’s trust in the technology, belief in its future prospects, or confidence that influential individuals in these networks won’t take advantage of others.

This allegiance is woven into a global web of users who collaborate tirelessly to promote their coin and demonstrate unwavering dedication to its success.

During times of price surges, the collective buzzes with enthusiasm.

When prices plummet, community members support each other’s—and their own—beliefs that this is just a momentary hiccup and that their combined efforts will ultimately yield substantial rewards. Even amidst the toughest crypto winters, such habitual behavior enables these speculative communities to endure. Community becomes a substitute for financial loss.

Investment strategies within these communities—and the conviction that underlies their success—entail reiterating and sharing what has been voiced by others, reminiscent of any traditional internet meme.

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Trolling traditional valuation

Understanding the genuine value of meme coins diverges from the valuation of conventional assets, such as stocks and physical goods. These assets have fundamentals grounded in a company’s financial performance or public demand for essential products, ranging from coffee to oil.

Conversely, the fundamentals of meme coins are evidenced in their network activity, such as daily active users, and more abstract measures like social sentiment and mindshare—the level of public awareness a coin has achieved relative to its competitors.

It is important to acknowledge that traditional asset valuations are also influenced by social elements. The primary difference is that meme coins provide little in terms of productive activity and contribute nothing to the economy. Sporadic attempts by their leaders to establish financial services around them are often perceived as afterthoughts, mainly aimed at inciting further speculation.

Meme coins challenge traditional valuation norms and ridicule the principles upheld by mainstream investors.

This is precisely the intention.

Engaging with meme coin communities—or any cryptocurrency community for that matter—involves embracing an alternative economic experience. They function as speculative arenas that allow participants to sidestep established investment regulations.

Who let the Doge out?

Musk embodies the archetype of the meme coin influencer.

Recognized as the world’s richest person, he is viewed by many as a paragon of savvy investing. His extensive follower base extends far beyond dogecoin’s dedicated audience. His promotional strategy is whimsical—so much so that the judge in his class-action lawsuit dismissed his dogecoin tweets as mere “puffery,” asserting that “no reasonable investor could rely on them.”

Dogecoin previously peaked in its memetic popularity during Musk’s appearance on “Saturday Night Live.” Now, instead of delivering jokes at the Weekend Update desk, he finds himself advising the president-elect in Trump’s office. Essentially, dogecoin’s memetic impact has transitioned from pop culture to political significance, capturing an even broader section of public attention.

While dogecoin has gained specific advantages from Musk’s association with Trump, the larger cryptocurrency landscape is thriving with optimism for a pro-crypto administration. In a speech at the Bitcoin 2024 conference in July, the GOP candidate vowed to make the United States “the crypto capital of the world.” With an investment of $131 million into this election cycle, the crypto sector now counts 274 pro-crypto members in the U.S. House of Representatives and 20 pro-crypto U.S. senators.

With Musk aligning with Trump and regulatory changes on the horizon, the dog can run freely once more.The Conversation

Maximilian Brichta, Doctoral Student of Communication, University of Southern California

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The post Dogecoin: A Humor-Fueled Phenomenon – What’s Driving Its Surge? appeared first on Daily Star.

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