Dogecoin, originally conceived as a parody of the frenzied world of cryptocurrency speculation, has evolved into a type of speculative asset that it initially sought to mock, largely due to the influence of Elon Musk. His social media activities and public endorsements have played a crucial and ongoing role in shaping Dogecoin's trajectory.

To explore this phenomenon further, BeInCrypto spoke with Erwin Voloder, the Head of Policy at the European Blockchain Association, to delve into how Musk blurred the lines between parody and promotion, prompting people to assign real-world value to a meme and raising ethical concerns in the process.

The story of Dogecoin began toward the end of 2013 when software engineers Billy Markus and Jackson Palmer teamed up to create what would become the first meme coin in cryptocurrency history. Designed primarily as a light-hearted parody of the chaotic crypto hype, Dogecoin was born from the \"Doge\" internet meme, featuring a Shiba Inu, and served as a humorous critique of the often irrational nature of crypto speculation.

Despite its satirical beginnings, Dogecoin swiftly garnered a devoted online following. So much so that Tesla CEO Elon Musk, who has since become a pivotal figure in the Dogecoin community, took notice. Contrary to its initial philosophy, Dogecoin has transformed into a speculative asset.

Beyond symbolic endorsements, Musk has demonstrated tangible influence. For instance, Tesla's decision in early 2022 to accept Dogecoin for certain merchandise significantly bolstered its standing and underscored its practical utility.

Musk has not shied away from leveraging social media to express his affection for Dogecoin. As an active Twitter user even prior to acquiring the platform, Musk has shared numerous posts referencing Dogecoin. Each tweet has notably impacted the meme coin's visibility and price performance.

When Musk referred to Dogecoin as his favorite cryptocurrency in a tweet in April 2019, the market responded dramatically. Within two days, the coin's price surged from $0.002 on April 1 to nearly $0.004. Two years later, Musk's declarations on X stating \"Dogecoin is the people's crypto\" led to an overnight trading volume increase of over 50%.

Retail investors soon followed Musk's endorsements without question. However, it wasn't all positive. Musk's unpredictable announcements also brought extreme volatility. When he described Dogecoin as a \"hustle\" on Saturday Night Live in May 2021, the coin's price plummeted by more than a third in a matter of hours.

In January 2025, President Trump appointed Musk as the head of a newly formed agency aimed at reducing federal spending. Musk named it the Department of Government Efficiency, or D.O.G.E. for short, a deliberate nod to Dogecoin. President Trump established the D.O.G.E. department via executive order on his first day in office. Following the launch of the department's official government website, Dogecoin's price rose by 13% in 15 minutes, reversing its previous short-term downturn.

However, since the formal establishment of the Department of Government Efficiency, Dogecoin's price has been in freefall. Valued at $0.36 on January 20, it has since dropped to $0.15 today.

Recent findings from a Finbold report suggest that Musk may now be having the opposite effect on Dogecoin's value and sentiment. The data reveals that the number of Dogecoin millionaire addresses has decreased by over 41% between January 21 and March 31. In just over two months, the cryptocurrency has lost 964 addresses.

Significantly, the report noted a substantial proportional decline in the number of the wealthiest Dogecoin addresses. The count of addresses holding $1 million to $9.99 million fell by 40.21% in Q1 2025. More strikingly, the number of addresses holding over $10 million plummeted by 47%, from 400 to 212.

In essence, Dogecoin whales are offloading the token.

Assessing the precise impact of Elon Musk's D.O.G.E. leadership on Dogecoin's performance is challenging, but his significant influence on the cryptocurrency is undeniable.

The ethical implications accompanying Musk's influence are also becoming increasingly difficult to overlook. According to Voloder, the Dogecoin case exemplifies the risks of parasocial investing, where individuals mistakenly attribute credibility to celebrities based on their fame or charisma. It further highlights the detrimental effects of uncritical reliance on endorsements, potentially resulting in substantial financial losses for retail investors.

The ethics of a billionaire influencing a volatile market like cryptocurrency presents significant complexities. Given the unregulated nature of the cryptocurrency industry, it is currently challenging to determine the extent to which Musk's actions can be held accountable.

Although presented as personal opinions, Musk's tweets demonstrably affect Dogecoin's price, creating a legal gray area regarding potential market manipulation under U.S. securities and commodities laws.

The Dogecoin case is not the first instance of a high-profile figure influencing markets in ways that could be deemed manipulative yet not explicitly illegal. Voloder pointed to two historical examples: when prominent banker J.P. Morgan guided markets during the panic of 1907 and when investor George Soros broke the Bank of England in 1992. Although their actions were technically legal, they managed to sway market outcomes. However, these impacts were proportionally much smaller compared to today's digital age.

In fact, the Securities and Exchange Commission (SEC) and legal experts are already debating Elon Musk's potential influence on Dogecoin's financial market activities.

Elon Musk currently faces a $258 billion class-action lawsuit alleging he ran a Dogecoin pyramid scheme. Filed in June 2022, the lawsuit claims Musk deliberately promoted Dogecoin through his tweets, public appearances, and media interactions, creating hype and driving up demand. The plaintiffs argue that this artificial inflation of Dogecoin's price allowed Musk and his companies to profit while leaving other investors with substantial losses when the price inevitably declined.

Due to the SEC's unclear legal classification of cryptocurrencies like Dogecoin, Voloder anticipates a difficult path for these claims in court. Nevertheless, the lawsuit signifies increased scrutiny of market manipulation by influential figures.

Musk's influence on Dogecoin persists, and the long-term effects on the Dogecoin community remain a topic of discussion. The rapid 40% decrease in Dogecoin whale addresses within two months has sparked questions about the meme coin's future strength and resilience.

However, Dogecoin's fundamental strength remains intact—its community. In the future, traders will watch to see if Dogecoin's 'cult following' eventually fades or if a strong community will sustain the 'OG meme coin'.

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