That’s why Elon Musk’s continued Dogecoin support is immoral

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Elon Musk isn’t helping less wealthy investors by continuing to pump a high-risk cryptocurrency.


Key points

  • Dogecoin is down more than 90% from its all-time high and many investors are under water.
  • Elon Musk says he continues to support Dogecoin because less affluent people want it.
  • However, some investors are pursuing a lawsuit that Musk pumped DOGE when it had no real value.

Dogecoin (DOGE) is many things to many people. Some see it as their golden ticket – an opportunity to win big and make a fortune. Others see it as a way to be part of a fun community. Elon Musk, billionaire and self-proclaimed Dogefather, has reasons for him. He initially said he liked Dogecoin because fate loves irony and the most ironic result would be that a joking cryptocurrency would become the currency of the future.

Now he says he only supports it because less well-off people have asked him for it. In June, Musk told Bloomberg: “I only know a lot of people who aren’t that rich who, you know, encouraged me to buy and support Dogecoin.” Honestly? If you want to help people who aren’t as wealthy as you, give money to charity. Don’t pump a high-risk investment.

The Moss effect

Several celebrities have jumped on the DOGE bandwagon, but none have been as dedicated as Musk, who has been tweeting about Dogecoin since 2019. DOGE’s price hit an all-time high just before Musk appeared on Live Saturday night last May. The pre-show frenzy has taken its price to an unsustainable level. He never recovered.

If you had bought $ 500 of DOGE on May 6, 2021, it would be worth around $ 50 today. The token is down more than 90% from its all-time high. And according to data from IntoTheBlock, just under half of the people who currently own Dogecoin are underwater for their investments. This means that their assets are worth less than they originally paid for them.

Other cryptocurrencies face similar price drops. But cryptocurrencies designed with one purpose in mind have a better chance of eventual recovery. Unlike, for example, Bitcoin (BTC) and Ethereum (ETH), Dogecoin doesn’t have much in the way of usefulness. There are no guarantees and even the cryptocurrency giants have their problems to overcome. However, it’s hard to see how Dogecoin’s investors will ever get their money back, particularly as its price hasn’t followed many of the top cryptocurrencies that hit new highs last November.

A healthy tale

A high-profile Dogecoin retail investor believes the good times will return. Dubbed SlumDoge Millionaire, Glauber Contessoto used his $ 188,000 life savings to buy DOGE in February 2021. He sold his Tesla and Uber shares to buy the token. And he did it in part because of Musk’s social media promotion.

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To start

In just a few months, his holdings were worth nearly $ 3 million. Contessoto became a bit of a poster boy for ordinary people who had success with Dogecoin. He did interviews with the New York Times and other outlets, and told them he had no plans to sell. He didn’t.

More recently, he claimed his holdings were worth around $ 230,000 and admitted that he regretted not making a profit. “While I’m still ready for my initial investment, what I regret is not withdrawing some of the profit in cash,” he wrote in a Newsweek article. “If I could go back in time, I probably would have taken $ 1 million or $ 500,000.” He remains confident that DOGE will recover.

Other investors can’t even say they are breaking even. They feel betrayed by Musk. Some have filed a $ 258 billion lawsuit against Musk and several of his companies. Initially presented by a disgruntled investor, other investors have now joined the fray. The lawsuit claims that Dogecoin’s investors have lost over $ 80 billion and that Musk has presented Dogecoin as a legitimate investment “when it has no value.”

Does Dogecoin have a future?

Dogecoin has come a long way. Originally created as a joke, the token now has a market cap of $ 8 billion, and the Dogecoin Foundation is working hard to retroactively design a purpose for what was once a joke cryptocurrency. On the plus side, it’s a recognized brand, more so than many other digital currencies, and the foundation has made some progress on several fronts.

Dogecoin I could gaining ground as a form of payment. The foundation is working, for example, to actually register its brand and promote the necessary technological developments. But it faces stiff competition, not only from within the cryptocurrency world, but from the outside as well.

For example, the US government is evaluating its digital dollar. These so-called govcoins or central bank digital currencies (CBDCs) could threaten payment cryptocurrencies. CBDCs would go against much of the original ideology behind Bitcoin. But they would also offer many of the benefits – low fees and fast transactions – without the volatility and risk.

Musk proudly states that he continues to support Dogecoin for people. But it’s not helping the Dogecoin Foundation actually build a future for the coin. It was initially rumored that one of his advisors, Jared Birchall, would represent Musk on the foundation’s advisory board. But Musk tweeted that this is not the case, and neither he nor Birchall have any ties to the organization.

If you only have a small amount of money to spare, don’t bet on a high-risk cryptocurrency. Look for low-risk investments that can help you build long-term wealth. It’s one thing to buy cryptocurrencies and hold a small amount of it as part of a balanced portfolio, but it’s another thing to go all in on Dogecoin because Elon Musk tweeted about it.

Bottom line

Musk played a significant role in pushing the price of a useless token to unsustainable levels. It is possible that Dogecoin will recover, but it is unlikely. The entire industry now faces an uphill battle. Not only does Dogecoin have no solid foundation to fight on, Musk isn’t doing much to help him.

Unfortunately, it is the retail investors who have been caught up in the frenzy created by a billionaire who will ultimately lose their hard-earned cash. That’s why Musk’s message I’m doing it for people is both immoral and out of tune.

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