Dogecoin prices continued to fall for the third consecutive day on May 11 mired by the recent remarks of self-proclaimed "dogefather" Elon Musk who called it a "hustle" in his recent appearance on Saturday Night Live.
At the time of writing this copy, dogecoin was trading at Rs 39, down 5.79 percent on WazirX. It touched an intraday high of Rs 48.56 and an intraday low of Rs 35. Year-to-date, the cryptocurrency has rallied over 10,113 percent.
In the run-up to Tesla chief's appearance on the popular sketch comedy show, dogecoin soared over 100 percent in May (till May 7) to touch a market capitalisation of nearly $88 billion, making it more valuable than most Indian companies, except Reliance Industries, TCS and HDFC Bank.
In his maiden appearance on Saturday Night Live (SNL), the maverick CEO was asked if dogecoin was a "hustle". He responded, "yeah, it’s a hustle." Musk also joked about gifting it to his mother on Mother's Day, much to her dismay.
Maye Musk, who joined the show on the occasion of Mother's Day, said, "I’m really excited for my Mother’s Day gift. I just hope it’s not dogecoin", Musk said, "It is".
This was contrary to the expectation of dogecoin enthusiasts who expected Musk to talk up the digital currency. According to crypto connoisseurs, this was the primary reason behind the torrid 3-day fall, which shaved off nearly 39 percent of its value.
Read: Dogecoin plummets 23% after Elon Musk jokes about gifting it to mother Maye on Saturday Night Live
Since the advent of the parody cryptocurrency in 2013, it has witnessed various bouts of pump-and-dump, a scheme to boost prices of a security based on false, misleading, or greatly exaggerated statements. And this time seems no different.
The price action of dogecoin was primarily driven by a social media frenzy where various celebrities such as Mark Cuban, Snoop Dogg and Musk endorsed dogecoin. However, to be fair to Musk and his counterparts, they never advocated buying the doegcoin and their tweets often came across as rather frisky. Nonetheless, for the unsuspecting FOMO (fear of missing out) investors, it acted like a rat trap.Read: Crypto platform WazirX crashes due to Dogecoin frenzy
Another tell-tale sign of a pump-and-dump is in the fundamentals of dogecoin. Unlike bitcoin which has a fixed supply of 21 million, approximately 5.26 billion new dogecoins are created annually via block rewards paid out to miners. This creates a mirage of unlimited supply which simply means that the value of dogecoin will continue shrinking unless it matched on the demand side.
Moreover, it has limited utility as only 0.000223 percent of all businesses accept it as a mode of payment. Also, it does not have the lowest fees structure or the most efficient network which makes it less desirable compared to other cryptos like nano, stellar, dash, litecoin, to name a few.