Elon Musk tweet about Dogecoin cryptocurrency sparks a frenzy

The Tesla founder is teasing his followers and attempting to keep the conversation around Dogecoin alive as cryptocurrencies trend down.

When it comes to Dogecoin, Elon Musk is like a dog with a bone.

The Tesla founder continues to spruik the popular cryptocurrency despite its recent poor performance in the wake of his appearance on US television show Saturday Night Live.

Musk, who has jokingly referred to himself as the Dogefather, is the most high profile proponent of the digital currency and was a major reason behind its rapid increase in value this year.

But its price took a beating over the weekend after he referred to it as a “hustle” in the punchline to a sketch about the coins.

The currency briefly traded at $US0.70 ($A0.89) per coin on the Tuesday before his SNL appearance, and was valued higher than Twitter and Ford, according to BeInCrypto.

But a sudden 25 per cent drop during Musk’s SNL appearance made investors nervous, wiping out $US20 billion in the cryptocurrency’s total market value before it recovered slightly.

On Wednesday evening the 49-year-old billionaire sparked another frenzy when he polled his Twitter followers about whether they’d like Tesla to accept Dogecoin.

Elon Musk. (Photo by Brendan Smialowski / AFP)

The electric car manufacturer is already accepting Bitcoin as payment for its products and Musk’s query received resounding support.

More than one million people voted inside the first hour of the poll being live, with the majority in favour.

Do you want Tesla to accept Doge?

— Elon Musk (@elonmusk) May 11, 2021

Dogecoin’s price immediately started trending upwards as investors reacted to the possibility of Tesla validating a cryptocurrency that began as a joke.

Musk’s SpaceX project, which aims to take people to Mars, is also accepting Dogecoin, according to another recent Musk tweet, but financial analysts continue to warn against it.

“While SpaceX might accept dogecoin as payment, those dogecoins will have been bought by people earning money in dollars, euros and pounds, and then converting it,” Laith Khalaf, a financial analyst at stockbroker AJ Bell, told Financial News.

A physical representation of Dogecoin. Picture: istock

“Until cryptocurrencies are used for things as mundane as paying your mortgage or your phone bill, or indeed receiving your wages, as a medium of exchange they simply add an extra layer to transactions, and most don’t actually perform a useful function in the real economy.”