Price of Dogecoin, Twitter, Elon Musk and the need for regulation

 A few days ago, everyone who entered his Twitter account was surprised to see a dog logo instead of the classic blue bird. What happened? Billionaire Elon Musk, the current CEO of Twitter, has arbitrarily and unilaterally replaced the main logo with the logo of the Dogecoin cryptocurrency.

 As a result, Dogecoin price broke above $0.10 and hit a 4-month high. Voices against it are also emerging, because after these kinds of actions, Musk is being accused of manipulating the price of this cryptocurrency and causing it to grow artificially in a short period of time.

 Home page from Twitter. Fountain.

 The point is, this isn't the first time Elon Musk has used a similar tactic. In 2021, a SpaceX mission (another of his companies) was fully funded by Dogecoin. Even Tesla accepts payments in this cryptocurrency on some products. Considering that Musk currently runs Twitter and is one of the most followed people on the social network, he knows that any mention of Dogecoin creating movements in the market is beneficial. financially for him.

 Risk of market manipulation

 By interfering with these characteristics in a company in which he has a direct interest, Musk induces artificial changes in the market that do not reflect a genuine interest in acquiring assets. electronic money.

 In this way, changing the Twitter logo causes a greater demand for Dogecoin based solely on speculation, meaning that it opens the space for investors with large amounts of this cryptocurrency to increase profits by sold to amateur investors, who suffered substantial losses. losses.when asset prices adjust.

 Increased volatility

 Massive speculation with Dogecoin can increase the volatility of the cryptocurrency's value and affect the entire market.

 It will be difficult for investors to know when is the best time to buy or sell because they will be subject to an information asymmetry caused by a relevant market participant, when naturally the price is governed by supply and demand. Furthermore, this is why manipulating market prices for stocks or other regulated assets is a crime.

 Losing faith in cryptocurrencies

 If the massive speculation in Dogecoin causes huge losses for individuals, then this could harm the entire crypto ecosystem.

 Many investors may end up turning away from cryptocurrencies without realizing their potential in promoting financial inclusion as an inflation haven, investment tool and/or remittance, because of the This activity directly affects the reputation of the entire ecosystem.

 Dogecoin's problem is that its growth is based on speculation instead of its services

 . The constant mentions of Dogecoin have made it one of the most powerful since he started promoting it.

 According to CoinMarketCap, Dogecoin is the eighth most valuable cryptocurrency, with a market capitalization of over $13 billion. It's good that it's achieved a prominent position, each cryptocurrency has a distinct project behind it that seeks to attack a specific need.

 The problem is that when its growth occurs on a speculative basis, it damages confidence in the market, rather than in the goods and services through which value is created.

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