Elon Musk’s return to crypto as Bitcoin and Dogecoin prices explode past $3 trillion is exciting many investors.
Why is Elon Musk back in crypto?
Elon Musk, the famous billionaire of Tesla, has recently made a surprising return to supporting crypto amid the strong price increase of Bitcoin and Dogecoin. In just one week, Bitcoin price has increased by 20%, reaching $90,000 and is likely to reach $100,000 as traders expect a favorable political future for crypto under President-elect Donald Trump. Alongside Bitcoin, Musk’s favorite cryptocurrency, Dogecoin, is also seeing massive gains, pushing the total cryptocurrency market cap above $3 trillion for the first time since 2021.
Musk’s return to crypto at this time has many wondering whether he intends to continue promoting Dogecoin and other cryptocurrencies in the future.
Musk recently commented on the inflation issue in Dogecoin. He supported the view of Dogecoin co-founder Billy Markus that Dogecoin’s flat inflation rate is a useful feature rather than a weakness. Markus explained that Dogecoin’s inflation – a steady and decreasing inflation rate – is beneficial to the use of Dogecoin as a currency. This sets Dogecoin apart from Bitcoin, which has a fixed supply of 21 million coins.
Musk agreed with this view, saying that developers could propose changes if they disagreed, but at the same time asserted that the current mechanism was appropriate. This underscores Musk’s approach to Dogecoin as a cryptocurrency with no cap on supply and long-term sustainability.
How will Dogecoin fare in the new political climate?
Dogecoin’s price returned to its highest level since the Musk-led crypto boom of 2021 last week. Throughout 2021, Musk’s statements inflated the market, causing Dogecoin to surge, and then when the market cooled, he faced lawsuits related to his alleged “inflating” of Dogecoin into a $258 billion “pyramid scheme.” However, those claims were dismissed by a court earlier this year.
Tesla and SpaceX — two of Musk’s major companies — also accept Dogecoin for some purchases, and Musk has revealed that he personally owns some Dogecoin. This shows how influential Musk is in the cryptocurrency market and how he continues to maintain his interest in Dogecoin.
Musk was recently appointed by President-elect Donald Trump to head the “Department of Government Efficiency” — the acronym DOGE, which matches the name of Dogecoin. Musk has also warned about inflation in the US, saying it could weaken the US dollar.
With Musk heading an agency that deals with government regulation and expressing concerns about the financial situation, he could have a bigger impact on cryptocurrencies. Whether he will continue to promote Dogecoin as an alternative to the dollar remains to be seen.
Musk’s public endorsement of Dogecoin and even ownership of the coin suggests that he has long-term plans for it. With partnerships with major companies like Tesla and SpaceX and Musk’s influence, Dogecoin has become one of the most notable cryptocurrencies on the market. Musk’s commitment to Dogecoin will likely help the coin maintain its strength and value, despite its volatility.
