YEREVAN (CoinChapter.com) — Elon Musk has played a key role in Dogecoin’s transformation from a parody to a speculative digital asset. His social media activity and corporate decisions have repeatedly influenced the price and popularity of the meme coin. In 2025, his involvement reached a new level with the launch of a U.S. government agency named D.O.G.E., short for the Department of Government Efficiency.
Musk’s announcement of the Department of Government Efficiency (D.O.G.E.) triggered an initial surge in Dogecoin’s price. However, the gains did not last. Between January 21 and March 31, addresses holding $1 million to $9.99 million in DOGE dropped by 40.21%. At the same time, wallets with over $10 million fell from 400 to 212, marking a 47% decline. Overall, Dogecoin millionaire addresses fell by 41% in just over two months, according to Finbold.
Dogecoin Was Built as a Joke. Musk Turned It Into a Speculative Asset
Dogecoin began in December 2013. Software engineers Billy Markus and Jackson Palmer created it to parody crypto hype. They chose the Shiba Inu meme, known as “Doge,” to represent the coin. Their intention was satire, not serious investing.
Despite the joke, Dogecoin gained traction online. By 2020, Elon Musk had started tweeting about it. His posts ranged from simple mentions to memes, all boosting Dogecoin’s visibility. In April 2019, he tweeted that Dogecoin was his “favorite cryptocurrency.” Within two days, its price doubled from $0.002 to $0.004.
“Musk’s involvement transformed Dogecoin from a satirical internet token into a speculative asset class by bestowing it with perceived legitimacy and entertainment value,” Voloder said. He added that Musk made Dogecoin a “cultural product with real economic consequences.”
Dogecoin Became a Meme Coin With Real Price Movements
By early 2021, Dogecoin’s market response to Musk’s posts intensified. When Musk tweeted “Dogecoin is the people’s crypto,” its trading volume rose by more than 50% overnight. But his influence also made Dogecoin highly volatile.
On May 8, 2021, Musk appeared on Saturday Night Live. When he called Dogecoin “a hustle,” the price dropped by more than 33% within hours.
Dogecoin lacks a clear development roadmap, provides no yield or built-in utility, and depends heavily on market sentiment. In such conditions, the price can shift dramatically based on the actions of a single influencer—particularly one with millions of followers and significant financial power.
Musk Named a Government Department After Dogecoin
On January 20, 2025, the U.S. Department of Government Efficiency (DOGE) launched its official website, prominently featuring the Dogecoin logo. This move led to a 13% surge in Dogecoin’s price within 15 minutes, rising from $0.33 to $0.40, reversing earlier losses and marking a 20% rebound from its intraday low.
The department, established by President Donald Trump and led by Elon Musk, aims to reduce federal spending and bureaucracy. The acronym DOGE, mirroring the cryptocurrency’s name, and the inclusion of its logo on the government site, sparked discussions about the blending of internet culture with official government initiatives .
On January 20, when the D.O.G.E. website went live, Dogecoin’s price jumped 13% within 15 minutes. It briefly reversed a prior downtrend, peaking at $0.36.
That rally was short-lived. From January 20 to April 12, Dogecoin’s price fell to $0.15—a 58% drop.
D.O.G.E. Hype May Have Reversed Its Price Momentum
The price drop following Musk’s D.O.G.E. appointment signals a clear shift in market sentiment. Although the timing coincides with the announcement, broader economic conditions also influenced Dogecoin’s decline.
Since 2022, central banks—led by the U.S. Federal Reserve—have repeatedly raised interest rates to combat inflation. These increases pulled capital away from risk assets like cryptocurrencies by making traditional options such as bonds more attractive. As a result, investor appetite for speculative coins, including Dogecoin, has weakened.
At the same time, regulatory pressure has grown. In the U.S., the SEC has stepped up enforcement, targeting major crypto platforms and tokens. The heightened scrutiny has added legal and compliance risks, especially for institutional investors, prompting a more cautious approach toward large crypto holdings.
The retail landscape has also changed. The 2021 surge brought millions of new users into crypto, many drawn by viral memes and celebrity endorsements. But after the market cooled, many left. Trading activity slowed, online interest faded, and meme coin inflows dropped. This decline in grassroots engagement has made it difficult for Dogecoin to recover lost momentum.
While these conditions provide critical context, the steep drop in high-value DOGE wallets after the D.O.G.E. website launch suggests that Musk’s involvement may have influenced investor behavior. The overlap between the two events points to a reaction shaped by sentiment but reinforced by tightening financial and regulatory environments.
Ethical Concerns Around Musk’s Dogecoin Activity
Musk’s continued promotion of Dogecoin has sparked renewed scrutiny over the risks tied to “parasocial investing.” This term refers to behavior where individuals rely on celebrity figures for financial cues without conducting independent research.
Retail investors—particularly those with limited financial experience—often act on public endorsements without fully grasping the potential downsides. This environment creates space for both financial losses and misplaced trust, especially in volatile and lightly regulated markets like crypto.
While Musk has the right to share personal views, his public statements can spark significant price movements, triggering either sharp rallies or declines. His influence, amplified by millions of followers and high visibility, raises concerns about the ethical responsibilities of public figures in financial discourse.
Under U.S. law, market manipulation typically involves deliberate attempts to distort prices or mislead market participants. The Securities and Exchange Commission (SEC) investigates such activity in securities markets, but Dogecoin does not fall under its jurisdiction. The Commodity Futures Trading Commission (CFTC), which oversees commodities, could potentially examine Musk’s influence under its broader authority.
The legal boundaries remain unclear. However, the impact of Musk’s social media posts is hard to ignore. Even when framed as personal commentary, his tweets often result in immediate price shifts. These repeated effects may serve as indirect market signals, regardless of intent.
$258 Billion Lawsuit Targets Musk Over Dogecoin
In June 2022, investors filed a $258 billion lawsuit against Elon Musk, accusing him of running a Dogecoin pyramid scheme. The complaint alleged that Musk used tweets and media appearances to artificially boost the coin’s value, profiting from the surge while others suffered losses as prices later collapsed.
The case highlights growing scrutiny of celebrity influence in financial markets. Although the SEC has not classified Dogecoin as a security, the legal process could become complicated due to the coin’s regulatory gray area. If courts determine that Musk knowingly manipulated the market or misled investors, he could face civil penalties or be required to settle.
This lawsuit follows a pattern. In 2018, the SEC took action against Musk over misleading tweets related to Tesla. That case ended with a consent decree, signaling that regulators are willing to intervene when public statements affect investor behavior.
