Dogecoin Surges Following Elon Musk News. What's Going on With This Popular Meme Coin?

Dogecoin is making headlines after President-elect Donald Trump announced the creation of the Department of Government Efficiency on X this past Wednesday. 

This meme coin was worth 16 cents on Election Day and has since more than doubled to a high of nearly 39 cents earlier today. However, according to CoinMarketCap, it's still less than half as valuable as its all-time high of nearly 69 cents back in May 2021. 

This unofficial department shares the same acronym as the cryptocurrency: DOGE. Trump announced that this new advisory department would be run by Elon Musk and Vivek Ramaswamy, a former Republican presidential candidate. Its stated goal will be to look for ways to reduce government spending to "drive large-scale structural reform." 

This department doesn't exist yet and will likely not launch as an official government department. Establishing an official government department requires an act of Congress.

Read more: How Trump's Election Victory Could Favor Elon Musk's Starlink

What does all of this have to do with dogecoin? 

Musk has been a big proponent of dogecoin over the years. Amid the post-election stock market boom, Musk's new position as co-head of DOGE sent the cryptocurrency soaring on Wednesday. It's remained high with slight fluctuations since then.

"Elon Musk's appointment to run the Department of Government Efficiency i.e. DOGE has catalyzed investment into Dogecoin," said Andrew Lunardi, a digital currency expert and head of chain adoption at Immutable, a crypto assets gaming company.

Musk's tweets and public statements have helped raise dogecoin's value in the past, and investors and experts like Lunardi expect this trend to continue if Musk promotes the cryptocurrency further in the future.

Dogecoin peaked in May 2021, then dropped substantially. The value of this cryptocurrency has remained relatively flat since the summer of 2022, until it saw a slight uptick in spring of this year and has since soared.

Cryptocurrency values for other digital coins have been increasing since Trump's presidential victory last week. In July, Trump announced at a bitcoin conference that he wants to make the US the "crypto capital of the planet."

Should I invest in dogecoin, bitcoin or other cryptocurrencies?

Investing in cryptocurrency can be risky. It's a highly volatile investment vehicle. If you're interested in exploring cryptocurrency like dogecoin or bitcoin, investment experts stress researching the market and never investing more than you're willing to lose.

"Bitcoin [and other cryptocurrencies] has been on a wild ride the past few years, but just because it hit an all-time high following the election, that doesn't mean investors should suddenly change their strategy," said Alex Michalka, vice president of investment research at Wealthfront, an investing platform. 

Diversifying your portfolio to help reduce your risk is also generally recommended. If you don't want to experiment with investing in crypto directly, you might consider investing a small portion of your portfolio in crypto exchange-traded funds. It's always advisable to consult with a trusted financial adviser before making changes to your investment strategy.

"I'd encourage investors to think of cryptocurrency as just one type of asset class you could include in your long-term, wealth-building strategy," Michalka added.

Why is crypto so volatile?

Cryptocurrencies like dogecoin and bitcoin do not have fully established valuation methods like other stocks and investments. Instead, the price is driven up mostly by hype. We've seen crypto rise to historic highs only to crash to dramatic lows shortly after. That makes this asset class extremely risky.

"The crypto market has never been a good place to invest. But at times, it certainly has been a profitable place for some to speculate," said Robert R. Johnson, professor of finance at Creighton University. 

If cryptocurrency becomes easier to value, and if there is broader adoption, Lunardi suspects this digital currency will become less volatile. But for now, he warns that it still remains a risky asset class.

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