- With great influencing power comes great responsibility: how are popular cryptocurrencies like Bitcoin & Dogecoin are using social influence as a vehicle to reach new highs in market value?
What’s Driving Crypto?
Many economists believe that some of the main forces driving crypto currently are in line with what drove GameStop shares earlier this year: excess stimulus money and increased screen time. However, an underlying yet key factor to consider is social influence: the need to conform with the crowd as crypto investing grows more mainstream.
The cryptocurrency Dogecoin, based on an internet meme of the same name (“Doge”) has gathered support from the Twitter account of snack favorite, Slim Jim. If it sounds crazy, that’s because it is—but it’s a crazy method that seems to be working in favor of both Dogecoin and Slim Jim.
Earlier this year, Slim Jim made Dogecoin a vital part of its marketing efforts. According to Lanie Friedman, Director of Brand Communications for the company, since Slim Jim adopted these marketing efforts in February, its Twitter following has increased fivefold. This case is one of many proving the amount of buzz there is surrounding cryptocurrency.
Elon Musk announced in early February this year that Tesla would be accepting Bitcoin as a form of payment, while also purchasing $1.5 billion of it, giving the cryptocurrency more viable legitimacy and boosting Bitcoin’s token price by roughly 17%.
However, more recently, Musk recanted Tesla’s new Bitcoin policy, saying: “We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment.”
This short statement held enough gusto to plummet the crypto by 10% in value. In a market where companies like Microsoft, Overstock, and Whole Foods are accepting cryptocurrencies as payment, does Tesla as one company hold enough weight to justify this movement?
Could all of this volatility mean our economy is moving towards an influence-based valued market? Call DSJCPA at 516-541-6549 or visit our website to stay up to date.