Is Elon Musk’s Dogecoin Pump Market Manipulation?
For the second time this year, a tweet to his 40 million followers has been able to influence the price of a cryptocoin. Yes, Elon Musk can find Dogecoin as amusing as he wants, but if the SEC is investigating XRP for possible market manipulation by not declaring whether Ripple is an investment good or a currency, then why isn’t the SEC asking Musk whether he is pumping Dogecoin? CNN is asking the same question in fact, they just have a different title.
You may find this funny, but Elon Musk has been accused of market manipulation of his own Tesla stock before, and was reprimanded by his own board just for that. The fact that he has changes his Twitter bio this week to now read as the former CEO of Dogecoin just goes to show how far it can go.
July and December
Dogecoin, the crypto designed as a joke, shows in its chart this year three clear spikes. In the past week, because of Musks’s tweet, the Dogecoin price is up 40%. One of the spikes belongs to a TikTok influencer, who stated that if all users of the social media platform (there is about a billion of them by now) would buy the coin for $25, they could get 10,000 if they all signed up.
Let’s all get rich! Dogecoin is practically worthless. There are 800 million TikTok users. Invest just $25. Once it hits one dollar, you’ll have ten grand. Tell everyone you know.
Said huckx8 in his viral TikTok video.
The Doge crypto spiked before it faltered again.
The other spikes can be pinpointed to two tweets that Elon Musk sent, in July and December respectively.
The first seemed like a harmless meme of a sandstorm engulfing a city in the Middle East. The storm had been given the face of a dog, presenting Dogecoin, whilst the city was supposedly the global financial system. Musk said:
A harmless joke you would think, but given that Musk has 40 million followers, many saw it as an affirmation of Dogecoin and started buying the small crypto on 17 July, sending it spiking 40%.
One word: Doge— Elon Musk (@elonmusk) December 20, 2020
One word: Doge.
The spike in both volume and price of Dogecoin after that tweet: once again up 40% in a week.
Hence the question: is this market manipulation or humor? How many people will buy Doge next time Musk tweets about it knowing that it is guaranteed to rise for some 24 hours after he does so.