It was one of the most heavily traded cryptocurrencies earlier this year, but Dogecoin (CRYPTO:DOGE) hasn't been a good investment lately, falling around 75% from its May high. However, the dog-themed coins showed some signs of life today, gaining 5.5% over the previous 24 hours as of 3 p.m. ET, according to CoinMarketCap. This modest jump is probably related to strong returns in the broader cryptocurrency market today. But there is another reason it's up as well.
Elon Musk is the CEO and founder of Tesla, although he prefers to call himself the "Technoking" of Tesla instead. And sometimes he even goes by another affectionate title: the Dogefather, so named because of his expressed love of Dogecoin. And at approximately 2 a.m. this morning, the Dogefather was on social media expressing his love of Dogecoin yet again.
It started with an exchange on Twitter as Twitter's founder Jack Dorsey -- a crypto enthusiast himself -- talked about how some cryptocurrency projects are more decentralized than others. Dorsey then tweeted that he wasn't "anti ETH," a reference to Ethereum. To this, Musk provided the unsolicited reply: "That's why I'm pro Doge." Trading volume for Dogecoin immediately picked up following Musk's tweet.
It should be pointed out that Musk doesn't seem to ignite the level of volatility with Dogecoin that he did earlier in 2021. Dogecoin gave back some of its gains not long after getting the initial boost from Musk. The bigger gains today coincided with strong performance across the broader cryptocurrency market, including Bitcoin which quickly rose from around $48,500 and briefly surpassed $51,000.
Cryptocurrencies tend to move up and down as a pack over the short term. As long-term investors, however, we are looking for cryptocurrencies that are showing the greatest promise of long-term adoption. Dogecoin could go up on some days because use cases and adoption are increasing. However, I believe it's fair to say that's not why Dogecoin was up today. Therefore, investors shouldn't take today's price movement as confirmation or negation of an existing investment thesis. Today's news can safely be filed away as irrelevant for long-term investors.