Elon Musk reaffirms his support for Dogecoin, says its better than Bitcoin

Key Takeaways:

• Billionaire entrepreneur believes Dogecoin (DOGE) is a better cryptocurrency than Bitcoin.
• The Tesla CEO also hinted that EV company will be accepting Dogecoin payments for its merch.
• Dogecoin gained over 21% intraday on Tuesday.

NEW DELHI (CoinChapter.com) — The meme-inspired cryptocurrency Dogecoin rocketed 46% low ($0.154) to high ($0.225) on Tuesday before prices pared. Dogecoin prices reacted to Tesla CEO Elon Musk’s tweet about Tesla planning to accept DOGE as payment for some of its merchandise.

Recently named TIME’s Person of the year, Elon Musk also talked about cryptocurrencies in an interview with the magazine. The ‘Dogefather’ said Bitcoin has little value as a transactional currency, citing the world’s largest cryptocurrency.

Mr. Musk also pointed out the high transaction costs for Bitcoin, stating that currently, it is more viable as a store of value.

Fundamentally, Bitcoin is not a good substitute for transactional currency. Even though it was created as a silly joke, Dogecoin is better suited for transactions. The transaction per day for Dogecoin has a much higher potential than Bitcoin.

Elon Musk in an interview to TIME

In contrast, Dogecoin, Elon Musk highlighted, has a much higher transaction flow (compared to Bitcoin). He further noted that though Dogecoin is inflationary, its inflation is a fixed number rather than a percentage. As a result, inflation would gradually decrease, encouraging people to spend it rather than hodl it as a store of value.

Also Read: Binance reopens Dogecoin withdrawals after Elon Musk called the situation “shady."

Dogecoin started as a joke on cryptocurrencies by its creators Billy Markus and Jackson Palmer, in 2013. Elon Musk has been a very vocal supporter of the meme token. Moreover, statements and tweets from the billionaire entrepreneur have often dictated DOGE’s price actions.

Dogecoin prices didn’t disappoint, as a tweet from Elon Musk on Dec 14 caused its prices to register 21% intraday gains.

Use Dogecoin To Buy “Much Wow” Tesla Merch

Elon Musk announced that some of Tesla would accept Dogecoin as payment for its merchandise. Products offered by Tesla include a $150 Giga Texas belt buckle. In addition, Tesla’s $50 Cyberwhistle, launched last month, sold out almost immediately.

The Tesla announcement would mark a great highlight in Dogecoin’s journey towards acceptance as a payment option. AMC, the world’s largest movie exhibitor, recently announced that it is planning to launch Dogecoin payments on its web and app portals.

As is the norm with Dogecoin, traders lined up to buy the meme token, sending prices above $0.2 before pulling back to close the day at $0.19. However, Dogecoin prices failed to start a rally as DOGE fell almost 10% on Wednesday before recovering a little.

Recommended: Shiba Inu & Dogecoin are s**tcoins with no value & no use: Jordan Belfort.

While Elon Musk is a vocal proponent of the meme coin, other investors feel that Dogecoin is similar to ‘meme stocks’ like GameStop. As such, many investors believe Dogecoin to be a risky investment option. For example, Ripple CEO Brad Garlinghouse said in an interview that he doesn’t believe the meme token ‘is good for the crypto market.‘

Dogecoin Price Charts

The Dogecoin price painted a disappointing picture after Tuesday’s gains, as prices failed to break out of DOGE’s almost seven-week-long downtrend. Retail traders likely started selling to gain from Dec 14’s jump. At present, $0.20 remains immediate resistance for DOGE.

The $0.20 price level previously supported Dogecoin prices between July 26 and Dec 3. Therefore, DOGE would need to move and consolidate above it for starting an uptrend. Moreover, once bulls conquer the $0.2 price level, the next resistance comes from a confluence of DOGE’s 50-day and 100-day MA trendline near $0.22.

The meme token is bearish across all time horizons, trading below its 50-day, 100-day, and 200-day MA trendlines. In addition, the 26-day EMA acts as a dynamic resistance. Meanwhile, immediate support for Dogecoin is at $0.17. If prices continue to fall, Doge could fall to $0.15, a price level last seen in mid-Apr.

The relative strength index for DOGE is currently with a value of 42.77.

On the other hand, Tuesday, trend-based momentum oscillator MACD painted a bullish crossover. A bullish crossover occurs when the MACD line (difference between 12-day and 26-day EMA) moves above the MACD signal line (9-day EMA of MACD).

However, the momentum seems weak, as the MACD histogram bars are barely in the positive region. Thus, it is likely that the DOGE’s momentum would soon turn bearish unless the meme coin can start an uptrend.

Dogecoin was trading at $0.177 at writing, down 7.48% on the day.