Why Dogecoin Is Rising Today

What happened

As of 11:30 a.m. ET Monday, the price of Dogecoin (DOGE -1.59%) had risen by roughly 5% over the prior 24 hours as Tesla founder and noted Dogecoin bull Elon Musk pressed ahead in his efforts to purchase social media giant Twitter.

So what

Over the last few weeks, after repeated ideological attacks on the methods by which Twitter deals with free speech issues, Musk launched what it would eventually become clear was a takeover bid. First, he purchased a more than 9% stake in Twitter. At that point, it looked like Musk might join Twitter’s board, but he would eventually decline its invitation to do so.

Musk then made a bid to buy Twitter for $43 billion in cash, valuing it at $54.20 per share. In response, Twitter’s board adopted a “poison pill” measure to thwart any hostile takeover attempt. Now, however, media reports are saying the company could reach an agreement with him, and Musk looks to have lined up the necessary financing.

Dogecoin is expected to benefit if Musk takes over Twitter because it is one of three cryptocurrencies Musk holds in large quantities, and it’s one that he has consistently promoted on social media and elsewhere. Many observers seem to think he would integrate Dogecoin on the platform somehow, which would broaden its exposure and use, and therefore, in all likelihood, its price.

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Now what

Considering that Dogecoin started as a joke and doesn’t have any unique real-world use cases or technical advantages over the thousands of other cryptocurrencies in circulation today, I’ve never thought of it as a good long-term investment. There may be potential for it to become useful if Musk winds up in a position where he can push for Dogecoin network upgrades and integrate the crypto into the Twitter ecosystem, but I would really need to see evidence of that happening first before I’d consider buying Dogecoin tokens.