Rockets aren’t the only thing Elon Musk is sending into the stratosphere.

After a three-year crash, Dogecoin explode againrising 250% since the election of Donald Trump – part of a wider wave of optimism in the industrydue to Trump’s courting of crypto lawyers during his campaign.

Trump’s informal appointment of Musk to what he calls Department for Government Efficiency – DOGE for short – also helped pump up the dog theme meme currency.

It’s not the first time that Musk, who calls himself “Father Dog”, fueled interest in Dogecoin.

In May 2021, its price rose in anticipation Musk’s guest appearance on “Saturday Night Live.” During one skit, Musk played the role of a financial analyst in conversation with a Weekend update host, who repeatedly asked him, “What is Dogecoin?” After some confusion, Musk’s character finally admitted it was a fluke. The price of the coin went in free fall. A little over a year later, it was loses over 90% of its peak value.

The losses hit small investors hard. In 2022, one of them filed a class action lawsuit against Musk for market manipulation and insider trading, though the case was dismissed in August 2024.

Why has Dogecoin – a meme coin that was never meant to be taken seriously as an investment – ​​seen such extreme swings in value?

We are all in this together

Dogecoin was launched in 2013 to spoof bitcoin and a host of other cryptocurrencies that claimed to disrupt the traditional world of finance. Two strangers from across the globe met onlinecopied the code of an existing coin and marked it with the already popular Doge internet memes – a picture of a Shiba Inu dog surrounded by fragments of broken English: “wow much coin.”

Although their main purpose was to make currency useless and undesirable, it has become one of the most popular and durable cryptocurrencies on the market.

After Dogecoin’s previous surge in 2021, I studied how his fervent network of influencers and everyday investors worked together to bring tremendous attention – and capital – to the joke coin.

To understand the appeal of these absurd investments, you have to look at the time and energy that users invest in these networks and the rewards, both financial and social, that they receive in return.

Memecoins are collaborative ventures. Members of these online communities have an economic incentive to become honest boosters: the more the value of Dogecoin increases, the more their investments grow. But they also get social validation from other meme coin investors when they raise the coin.

In other words, behind every meme coin is a collective of strangers with a common mission to make more money.

Dogecoin and its imitators have been described by their management as crypto moves, common trips and community property projects. Beyond branding assets with culturally resonant images, be it a Shiba Inu dog or Pepe the Frogsuccessful crypto businesses are characterized by complex networks of trust. Trust in technology. Have confidence in its potential for future appreciation. And trust that those who hold the power in the networks will not exploit the rest.

This loyalty is woven among a global network of users who collaborate around the clock to promote their coin and demonstrate their unwavering commitment to its success.

In times of price appreciation, the collective buzz with joy.

During price drops, community members reinforce each other’s beliefs to their comrades—and themselves—that this is just a bump in the road and that their collective efforts will eventually lead to a handsome payoff. Even in the coldest of crypto wintersthis ritualistic behavior helps these speculative communities endure. Community serves as a substitute for financial loss.

The investment strategies in these communities – and the belief in their reward – involve repeating and reposting what others have said, like any traditional internet meme.

Traditional rating trolling

The true value of meme currencies cannot be understood in the same way as traditional assets such as stocks and physical commodities. These types of assets have fundamentals, such as a company’s financial statements or public demand for basic goods from coffee to oil.

Instead, the fundamentals of meme currencies are reflected in their network activity, such as daily active users, and less tangible metrics, such as social sentiment and mind sharing – how much public awareness a coin has generated compared to its rivals.

Of course, traditional asset valuations are also affected by these social factors. The difference is that meme coins offer little in the way of productive activity. It adds nothing to the economy. Occasionally, their leadership will build financial services around thembut these are generally added as afterthoughts, mostly as a way to generate more speculative excitement.

Meme coins troll traditional valuation conventions and mock the edicts and dogmas of mainstream investors.

And that’s exactly the point.

Participating in meme coin communities – or any crypto community for that matter – involves embracing an alternative economic experience. They are speculative sands to play outside the conventional rules of investing.

Who kicked out the Doge?

Musk is the quintessential meme coin influencer.

As the richest man in the world, he is seen by many as a paragon of smart investing. His massive following it extends far beyond Dogecoin’s social network. And its promotional efforts are playful — so playful that the judge in its class-action case disavowed his Dogecoin tweets as mere “puff” and that “no reasonable investor could rely on them”.

Dogecoin previously reached the height of its memetic moment when Musk appeared on “Saturday Night Live.” Now, instead of sitting at the Weekend Update desk cracking jokes, he’s sitting in Trump’s office advising the president-elect. In other words, Dogecoin’s memetic resonance has ascended from pop culture to politics, helping it capture a larger portion of the public.

While Dogecoin has particularly benefited from Musk’s proximity to Trump, the broader crypto market is leaping with optimism for a crypto-friendly administration. Speaking at the Bitcoin 2024 conference in July, the GOP candidate made sure to make it to the United States “the crypto capital of the planet.” After casting $131 million this election cyclethe crypto industry can now claim 274 pro-crypto members of the US House of Representatives and 20 pro-crypto US senators.

Between Musk getting closer to Trump and a changing regulatory environment, the dog can once again run free.