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Elon Musk's recent suggestion that Tesla might accept Dogecoin as a payment method for its electric vehicles has once again drawn attention to the memecoin market, sending DOGE's price soaring by more than 9% in just the past 24 hours.. This announcement comes in the middle of a broader frenzy in the memecoin sector, with trading volumes reaching almost $80 billion in the past week, which certainly proves that the sector is seeing a very robust influx of new capital.
Alongside Dogecoin, other memecoins like dogwifhat (WIF) have also seen large price increases, with WIF hitting a new all-time high after a quite successful crowdfunding campaign to put WIF on the Vegas Sphere. People should, however, still tread carefully as soaring memecoin prices have been indicators of market tops in the past. On the other hand, the current meme frenzy might be a different story as there are so many unique forces driving up the prices of memes.
Dogecoin as a Payment Method for Tesla?
Elon Musk, the CEO of Tesla, has once again stirred excitement among Dogecoin (DOGE) investors by suggesting that the electric car manufacturer may eventually accept the memecoin as an official payment method for buying its vehicles. This conversation took place during a public interaction at the Berlin Gigafactory, where an audience member asked about the possibility of buying Tesla cars with Dogecoin in the near future.
Musk's interesting response, "At some point I think we should enable that," led to a surge in DOGE’s price, which climbed by more than 9 % after his comments. CoinMarketCap indicated that the memecoin was trading hands at $0.1872 at press time.
The Tesla CEO has been a very vocal supporter of Dogecoin, often referring to it as "people's crypto" in contrast to Bitcoin, which he believes has gained support from many wealthy individuals. Musk's preference for Dogecoin stems from his desire to back a cryptocurrency that resonates more with the general public. Tesla has already embraced Dogecoin for merchandise purchases since Jan. 14, 2022, but the recent conversation has certainly reignited speculation about its expansion to vehicle payments.
Additionally, Musk's recent endeavors with his "everything app" X have sparked even more speculation in the crypto community. With the creation of an 'XPayments' account for the app's upcoming payments feature, there's anticipation around whether this new service will extend beyond traditional fiat currencies to include cryptocurrencies like Dogecoin.
‘WIF’ of Success
DOGE is not the only memecoin attracting people's attention at the moment. The Solana-based memecoin, dogwifhat (WIF), experienced a 25% increase in price, reaching a new all-time high of $3, after a successful crowdfunding campaign that raised more than $700,000. At press time, WIF was still trading above the $3 mark at $3.09. The announcement of the campaign's success even pushed its market capitalization to $3 billion momentarily.
This campaign, known as "Sphere Wif Hat," aimed to advertise the memecoin's logo on the Las Vegas sphere, was supported by key figures in the crypto community, including a well known crypto trader with a large following on social media. The campaign quickly exceeded its funding goal, collecting more than $702,000 in USD Coin donations. The crowdfunding effort also got backed by major players in the Solana ecosystem, like the Phantom Wallet, which actively promoted the campaign.
However, there has been no public confirmation that the Las Vegas sphere actually accepted the marketing campaign. The initiative has also stirred mixed reactions in the crypto space, with some people seeing it as a sign of market exuberance. Despite this, WIF's remarkable performance has pushed it above other very well-known memecoins, making it the fourth-largest memecoin by market capitalization.
Rise of the Memecoins, but…
It is very clear that the digital asset market is currently experiencing a huge surge in the trading of memecoins. This trend has seen trading volumes reach almost $80-billion in the past week, a peak not seen since October of 2021, right before the burst of the last crypto bubble. Memecoins like dogwifhat and Pepe are leading this frenzy, even outpacing the gains of Bitcoin.
This increase in memecoin trading volume, according to data from the blockchain data firm Kaiko, indicates a robust inflow of new capital into the crypto markets, despite the historically speculative nature of these tokens. Research analyst Dessislava Aubert of Kaiko points out that while surges in meme tokens have traditionally signaled market tops, the current dynamics might be different because of some of the unique factors driving interest in specific tokens, which are becoming less correlated with bitcoin's movements.
The allure of memecoins lies in their low entry price, offering investors the potential for impressive returns very quickly, despite the absence of traditional fundamentals backing these digital assets. However, Thomas Perfumo, the head of strategy at Kraken Digital Asset Exchange, warns that the market cap figures of memecoins might not reflect their actual realizable price due to their potential impact on the market when selling large amounts.
This is certainly not stopping memecoin fans, which is evident in the dogwifhat Vegas Sphere saga, and Elon Musk’s continued support of DOGE.