What’s behind dogecoin’s price spike? Elon Musk and an army of posters
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If you’ve seen a popular tweet about dogecoin, the volatile digital currency based on a meme about a shiba inu, recently, there’s a decent chance that the official Slim Jim Twitter account will have a top reply — or have authored the tweet itself.
Slim Jim — yes, the company that sells beef jerky snacks — has made dogecoin central to its recent marketing and social media efforts. And since the company started tweeting about the coin in February, its Twitter presence has grown fivefold, according to Lanie Friedman, a spokeswoman for Slim Jim parent company Conagra Brands (she did not answer whether actual sales have also increased).
You’d be forgiven for not immediately understanding the marketing connection between a cryptocurrency and a beef jerky purveyor. But the dynamic is, to my mind, a perfect encapsulation of the current meme economy: Take some abstract, niche financial product like a joke cryptocurrency, hype it up on social media to the point that thousands of posters are churning out and engaging with free content about it and eventually exchange that hype for tangible cash.
The more absurd the product, and the more ironic and bombastic the discourse around it, the better. And Slim Jim has zeroed in on one of the weirdest and most popular out there, deeming its strategy a “memes and meats” approach to posting, says Friedman. The social media campaign is not related to the value of dogecoin, she says; rather it works because both companies are “rooted in meme culture” and share “inclusive, positive” communities online.
For its part, dogecoin, which was created in 2013 as a parody of bitcoin, has been trading at record levels these past few weeks thanks, primarily, to the antics of billionaire memelord Elon Musk, according to Mike Bucella, general partner at BlockTower Capital. No joke: Its market capitalization of over $63 billion, as of Wednesday, is bigger than three-quarters of the companies in the S&P 500.
How can that be? A major driver of the meme economy is the desire to “stick it” to the establishment, says Avi Felman, head of trading at BlockTower Capital, noting that dogecoin has a lot in common with the GameStop rally from earlier this year. If the price of something like bitcoin can reach $60,000, or if the government can print trillions of dollars at once, people start questioning what is actually real, he says.
“If the richest man in the world is tweeting about a coin named after a dog, why can’t it be real?” says Felman, referring to Musk, who has claimed the title of world’s richest person a few times.
It all comes down to the community dogecoin fosters, Billy Markus, the software engineer who co-created the coin, writes in an email to CNBC Make It.
“The crypto community can be pretty elitist and not very inclusive, and we wanted to make a community that was more fun, lighthearted and inclusive,” Markus writes. “It worked, and is why the dogecoin community consistently maintains a presence.”
It’s not just “the absurdity of Dog Money,” he adds, pointing to this YouTube video. “There’s something pure about it too.”
Slim Jim’s embrace of dogecoin is just one example of the weirdness of the modern meme economy. The aforementioned GameStop saga of yore is another, as is a 23-year-old software developer making a nonfungible token (NFT) out of “cheugy,” the buzzy word she coined that loosely translates to “basic” and is a meme in its own right.
If you’re confused about what any of those words mean, you’re not alone. The meme economy has spawned its own vocabulary, comprised of NFTs (unique, digital assets) and stonks (stocks) that you hodl (hold) in hopes of going to the moon (benefiting from a rapid and enduring increase in price). It’s all part of the joke, showing that the investors don’t take any of this too seriously. Except that they do, of course — they’re in it to make money, not just memes.
Still, snapping up 100 shares of a meme stonk in the hopes that it will continue to rise in tandem with its Reddit upvotes is not a money-making strategy that will work for most people long term. Some people are watching their holdings grow, but where there is a crush of enthusiastic investors trying to cash in on a crypto craze, there will be losers.
“My guess is that [the rally] won’t last, especially for something like dogecoin which was never meant to be a payment system or a store of value,” Adam Zadikoff, COO of BRD, a crypto wallet that boasts more than 7 million users, told my colleague Nicolas Vega. “Yes, you can make a quick buck if you time it right, but timing the market is a terrible thing to try to do. It does not work.”
But with trading more affordable and accessible than ever, and billionaires using their massive platforms to push their favorite stocks and cryptocurrencies, BlockTower’s Felman says the meme economy is just starting to take off. Some investors may make it to the moon.
If you dabble in Doge or the larger meme economy, I’d love to talk with you. Email me at [email protected].