Elon Musk continues to support Dogecoin even amidst cryptocurrency slump

Why is this not a surprise?
Ameya Paleja
  • Elon Musk companies support Bitcoin, Dogecoin payments for their merchandise.
  • Last month, Tesla liquidated almost all of its Bitcoin holdings though.
  • Musk likes Dogecoin because it does not take itself too seriously.

Tesla CEO Elon Musk has not been shy of showing his support for cryptocurrencies. However, after the recent slump these alternate currencies have seen, Musk and his company Tesla have ditched Bitcoin and now continue to support Dogecoin, Forbes reported.

Recording all-time highs in just November last year, cryptocurrencies have seen their values drop drastically across the board. With the U.S. Federal Reserves and the other central banks increasing interest rates to rein in inflation in their countries, investors focused on relatively safer and conventional investment options.

This has meant that risky investments like cryptocurrencies have lost their sheen, something that is evident in the drastic price drops we have seen for the cryptocurrency market as a whole. From their record three trillion valuations, crypto markets have shrunken to less than a third in less than a year, and the poster boy of cryptocurrencies, Bitcoin, has lost loyalists like Elon Musk.

Tesla's tryst with Bitcoin

In early 2021, Musk's company Tesla invested $1.5 billion in Bitcoin and a month later also began accepting the altcoin as payments for its electric vehicles. It was only after public backlash over environmental concerns about Bitcoin usage that Tesla rolled back its decision. However, it retained its Bitcoin holdings while continuing to accept the cryptocurrency for merchandise payments.

After the cryptocurrency slump and the economic uncertainty that accompanied though, the company liquidated almost all of its Bitcoin holdings last month, Forbes said in its report. However, Musk continues to retain his faith in Dogecoin, a cryptocurrency he has supported many times over in the past.

Why does Elon Musk like Dogecoin?

In an interview with the Full Send Podcast, Musk revealed that he likes Dogecoin because the cryptocurrency does not take itself too seriously. Instead, it has "memes and dogs" and "a sense of humor."

Musk believes that the "memecoin", as it was originally designed to be, has a better "total transactional throughput capacity" when compared to Bitcoin. This is why Musk, who has earlier supported Dogecoin, plans to continue buying the Bitcoin rival in the future as well and will continue to support it publicly.

Musk's companies Tesla and SpaceX continue to accept Dogecoin as a payment option for their merchandise. Despite all of Musk's efforts, Dogecoin continues to languish at around six cents, a far cry from the 70-cent high it saw last year.

Musk's continued vocal support for the cryptocurrency has also found him at the receiving end of a lawsuit that accuses him of racketeering to pump up the price of Dogecoin.

Interestingly, Musk has sparred with one of the creators of Dogecoin and has also called him "a tool", after the latter commented about Musk's coding abilities. The creators have long left the Dogecoin project which continues to evolve, thanks to other developers. In June, an update to the Dogecoin blockchain was expected to improve its security and efficiency, Forbes said in its report.

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