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In another open support for Dogecoin, Elon Musk has announced Tesla will start accepting Dogecoin for payments soon.
Elon’s support for Dogecoin has been consistent for a long time as he has always spoken positively about the coin. This open support attracts market attention with his announcements causing the coin rally.
Today’s tweet has Dogecoin rallying by at least 24% when most top currencies are in a major bear trend. There is no doubt Elon Musk is among the top if not the best cryptocurrency influencer today.
Investors are always following his announcements closely as they may be the bridge to the next rally.
What is Dogecoin?
Dogecoin is a decentralized coin that supports peer-to-peer transactions. Since its launch in 2013, it has grown to become among the top cryptocurrencies in the market.
It is commonly known as a meme coin due to the initial lack of utilization. In its early days, Dogecoin was focusing on becoming a fun coin meant to ridicule other coins that were starting to take over the market.
Its success is inspiring the creation of other meme coins such as the Shiba Inu coin. Shiba is also known as the Dogecoin Killer due to its competitive similarities.
Effects of Elon Musk Tesla Dogecoin Tweet on Price
The market is taking this announcement as a bullish sentiment. This is evident with the price rising over 20% after the tweet. This follows a similar trend where Elon’s positive remarks on the coin always cause a rally.
Today’s announcement comes after he made a recent TV interview repeating the comments of Dogecoins superiority over Bitcoin.
Musk had also run a Twitter poll earlier in the year on whether that company should start accepting cryptocurrency with the majority of voters supporting the idea.
This is not the first time Tesla is accepting cryptocurrency transactions. Earlier in the year, Tesla accepted Bitcoin for purchases. However, this lasted for only 2 months before stopping the project.
Future of the Dogecoin and Tesla
Musk has made it clear the project will only be on a trial basis covering products with lower prices. If successful, this could be a key support pillar for Dogecoin helping drive its price higher.
It will also act as a market benchmark of how such future projects can be undertaken successfully. However, cryptocurrencies still face the challenges of high volatility and low inclusivity levels.
The transactional costs are also very high in comparison to the existing traditional payment channels. Another challenge is the slow transitional speeds.
For them to be competitive, they have to address these challenges.