Musk's tweets boosted Dogecoin's surge to a new high, and analysts warned of caution in entering the market

On February 7, Tesla CEO Musk tweeted "Who let the Dogecoin out?", which once again pushed the price of Dogecoin up to 8 cents, setting a new record high. At the same time, its market value once reached 10 billion US dollars, becoming the eighth largest cryptocurrency. However, because retail investors have recently participated in the speculation of Dogecoin, institutions have reminded people to be wary of price manipulation and to be cautious when entering the market now.

Tesla CEO Musk's tweets stimulated a surge in Dogecoin

As shown in the figure below, in just two weeks, the price of Dogecoin has risen by 900% from the level in late January, while it was only 0.4 cents at the beginning of the year. According to Coingecko data, the current market value of Dogecoin is 10.582 billion US dollars, making it the eighth largest cryptocurrency.

Tesla CEO Musk seems to be particularly interested in cryptocurrencies recently. In the past week, he has released a series of tweets to fuel the trend, and the market has given him enough face every time.

Previously, he changed his social media signature to "Bitcoin", and Bitcoin surged 20%. In the early hours of Thursday morning, Pacific Time, he suddenly posted the word "Doge" on social media, along with a picture of flames, and the market moved again, with Dogecoin quickly soaring 50%.

In fact, as early as 2019, Musk discussed Dogecoin on social media and called it his "favorite digital currency." Dogecoin is a cryptocurrency that was created in December 2013 by Australian entrepreneur Jackson Palmer and software engineer Billy Marcus. The original intention of launching this currency was to mock digital currencies such as Bitcoin.

In 2013, the price of Bitcoin rose rapidly, from being worthless to tens of dollars. At the same time, the doge emojis were all over the screen. So Australian entrepreneur Palmer posted a tweet as a joke. In order to increase the amount of ridicule, he also bought Dogecoin.com to match the official website of bitcoin.com.

Retail investors' enthusiasm also boosted Dogecoin, and analysts warned that prices could be manipulated

In addition to Tesla CEO Musk's tweets, there are other factors that pushed up Dogecoin. Two weeks ago, retail investors who shorted GME suddenly discovered Musk's previous post that he liked Dogecoin, and shared it in the WSB community, causing a wave of hype.

Recently, many American retail investors said that Dogecoin will be another investment target pushed up by hot money after GameStop stock and Bitcoin. The price will reach US$1 and will subvert the cryptocurrency market.

An investor pointed out that Musk's recent orders seem to be less and less effective, and the market is no longer emotional because of his casual remarks. Retail investors are easily used as tools by market makers, just like the last surge in Dogecoin, which first quickly pulls up the market and then sells off the chips when retail investors enter the market.

Industry insiders said: "Dogecoin will rise after the order is called, but there will be more ups and downs in the middle. Investors who gain from the rise of Dogecoin are bound to be far less than those who lose money due to the ups and downs of the market."

Ma Tianyuan, chief analyst at Huobi Research Institute, pointed out that Dogecoin is easy to buy on non-encrypted trading platforms such as Robinhood, and the unit price is very low, so the investment threshold for users is very low. Recently, mainstream virtual currencies such as Bitcoin have been fluctuating sideways, and speculative funds are also looking for new opportunities to enter the market.

Despite the fierce rise of Dogecoin this time, he still reminded investors to enter the market with caution.

He pointed out: "First, the Dogecoin project itself is more like a cultural symbol. Compared with mainstream virtual currencies, there are almost no breakthroughs in technical concepts. Second, Dogecoin holders are highly concentrated. The top 10 holding addresses own 41.35% of all circulating tokens. It is easy for a small number of users to manipulate prices." (Huitong.com)