Musk’s Conflict with Trump and Departure from DOGE Could Harm Dogecoin Significantly
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It’s been a bad week for DOGE. And a really bad week for dogecoin. The meme coin, which gained popularity in part due to Elon Musk dubbing it “the people’s crypto,” fell about 10% on Thursday and is down 22% over the past week. This drop corresponds with Musk’s official departure from the Trump administration and the Department of Government Efficiency (DOGE), which was central to his efforts to radically downsize the federal government.
Musk and Trump had been engaged in a verbal showdown in recent days, with Musk criticizing the president’s spending bill, and Trump withdrawing the nomination of Jared Isaacman, a Musk ally, as his pick to run NASA.
However, the conflict escalated dramatically on Thursday. After Trump expressed his “very disappointed” feelings toward the Tesla CEO, Musk retaliated on X, asserting that Trump would have lost the election without his support. Trump labeled Musk as “CRAZY” and threatened to cancel his government contracts, causing shares of electric vehicle maker Tesla to close down 14% for the day.
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Dogecoin and Tesla shares dropped as Elon Musk’s dispute with the president unfolded.
Musk responded on X, saying, “Go ahead, make my day.” He later remarked that following Trump’s comment about canceling contracts, his rocket company SpaceX “will begin decommissioning its Dragon spacecraft immediately.” Dragon is the only U.S. option for transporting crew to and from the International Space Station.
The spat may not necessarily affect the price of dogecoin, which, like most meme coins, lacks an attached asset or underlying value. However, it is a particularly volatile coin that can fluctuate based on consumer sentiment, celebrity hype, internet memes, and Musk news. Musk’s public support of dogecoin has long been a significant factor in its price, making it especially susceptible to changes in his political standing.
The price experienced a jump of over 15% on a single day in 2022 after Tesla began accepting the cryptocurrency as payment for select merchandise. The following year, dogecoin surged more than 30% in a day after Musk replaced the blue bird on the Twitter (now X) website with an image of a shiba inu, the digital coin’s logo.
Dogecoin, along with bitcoin and other cryptocurrencies, experienced a rise after Trump’s election victory in November, fueled by optimism that the new administration, backed by Musk and the crypto industry, would enact favorable policies and deregulation. Buyers of the coin are now facing the repercussions of the Musk-Trump fallout.
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