Dogecoin sees value slash after Musk calls it a ‘hustle’

Starting as a joke, Dogecoin surged more than 16,000 percent the past year but was down 36 percent after Musk’s comment.

Musk's appearance on SNL puts him back in the spotlight [File: Liesa Johannssen-Koppitz/Bloomberg]

Dogecoin lost more than a third of its price on Sunday after Tesla chief and cryptocurrency supporter Elon Musk called it a “hustle” during his guest-host spot on the Saturday Night Live comedy sketch TV show.

Dogecoin was quoted as low as $0.416 on crypto exchange Binance, down 36 percent from levels around $0.65 before the show. It retraced some of that move later on Sunday and was last trading around $0.569.

The cryptocurrency, which started as a joke in 2013, has surged more than 16,000 percent in the past year, Bloomberg reported citing crypto data tracker Musk has been among its biggest boosters, along with celebrities Mark Cuban, Snoop Dogg and Gene Simmons.

Cryptocurrency enthusiasts had for days been eager to see what he would say on the show after his tweets this year turned the once-obscure digital currency into a speculator’s dream.

Asked: “What is Dogecoin?” Musk replied, “It’s the future of currency. It’s an unstoppable financial vehicle that’s going to take over the world.”

When a show cast member Michael Che countered: “So, it’s a hustle?” Musk replied: “Yeah, it’s a hustle,” and laughed.

‘The future currency of the earth’

It is rare for business moguls to be asked to host SNL and Musk’s appearance on the iconic late-night show puts him back in the spotlight just as Tesla’s stock is losing steam following last year’s monster rally.

The unconventional CEO has posted numerous comments about cryptocurrencies on Twitter and criticised regular cash for having negative real interest rates.

“Only a fool wouldn’t look elsewhere,” he said in February.

On Thursday, Musk tweeted: “Cryptocurrency is promising, but please invest with caution!” with a video clip attached in which he said: “It should be considered speculation at this point,” but that cryptocurrency could well become “the future currency of the Earth”.

Some financial commentators questioned whether it was responsible for Musk to comment on the cryptocurrency, given he has the power to move its price.

“I think he’s having a lot of fun … He can say anything he wants about Dogecoin or cryptos, fully aware that just him saying something moves the price,” said James Angel, associate professor at Georgetown University’s McDonough School of Business, who specialises in financial markets and cryptocurrency. “Anyone who wants to play the Elon Musk game should be prepared to lose all their money.”

Other crypto experts said Sunday’s Dogecoin selloff was driven by speculation and that Musk had not hurt its long-term prospects.

“Long term fundamentals of Doge are intact. This is a buying opportunity,” said Jehan Chu, managing partner at Hong Kong blockchain venture capital firm Kenetic Capital. “It’s a true social currency – that’s its value.”

Trading issues

The flood of selling appeared to cause problems for popular retail trading platform Robinhood, which tweeted early on Sunday that due to high trading volume and volatility some customers had experienced “intermittent issues” trading cryptocurrencies.

The company later said the issues had been resolved and that it would contact customers affected by the downtime.

CoinGecko says Dogecoin has jumped more than 800 percent over the last month and is now the fourth-largest digital currency, with a market capitalization of $73bn. It hit a record high Thursday above $0.73.

Tesla said in February it bought $1.5bn worth of Bitcoin and would soon accept it as a form of payment for its electric cars, a large stride towards mainstream acceptance that sent Bitcoin soaring to a record high of nearly $62,000.

Tesla shares closed 1.3 percent higher at $672.37 on Friday.

Source: News Agencies