A comment by Tesla CEO, Elon Musk, during his appearance on Saturday Night Live has led to the fall of cryptocurrency, Dogecoin, by 22 per cent on Saturday.
During the show, his mum, Maye Musk, had revealed her anticipation for the gift the Tesla CEO was going to get her for Mother’s Day.
“I’m excited for my Mother’s Day gift,” Maye Musk said. “I just hope it’s not dogecoin!”
“It is,” Elon Musk said. “It sure is.”
Before the show, Dogecoin which traded at 70 Cent at the start of Saturday dropped to 54 Cents by the end of the day.
Musk, the world’s second-richest man has been a major promoter of Dogecoin which is the fourth-biggest cryptocurrency in the world.
A tweet from him to his over 50 million followers usually sees a rise in the activities of Dogecoin. According to him, Dogecoin is “the future of currency, it’s an unstoppable financial vehicle that’s going to take over the world.”
“There are many differences between dogecoin and bitcoin,” says Meltem Demirors, CoinShares chief strategy officer.
One of the “most important” is the supply of each, she says.
Dogecoin is inflationary, says Demirors, meaning “more doge is printed every minute of every day, giving doge a potentially infinite supply.”
For example, “every minute of every day, 10,000 more dogecoin are issued. That equates to nearly 15 million doge per day or over 5 billion doge per year,” she says.
An unlimited cap on supply can negatively impact value over time.
Bitcoin, on the other hand, has a finite supply of 21 million, which creates a “built-in scarcity … akin to the way that gold or diamonds are valuable because they are scarce,” James Ledbetter, editor of fintech newsletter FIN and CNBC contributor, says.
This scarcity is central to why bitcoin bulls argue for holding the cryptocurrency long-term – because it is limited, as demand increases, the price of bitcoin should as well.
Because of this difference, “I see most people trading dogecoin on a short-term basis,” with investors hoping to make a quick profit, “and choosing to hold bitcoin over a longer duration,” Demirors says.