Elon Musk triggers brief dogecoin spike

Elon Musk asked his Twitter followers how long runaway inflation will last

The meme-inspired cryptocurrency dogecoin (DOGE) surged by as much as 10% on Monday, after Elon Musk stated that he will not be selling his cryptocurrency holdings. 

Inflation

Last week, the United States Bureau of Labor Statistics (BLS) revealed that inflation in the world’s largest economy rose to a 40-year high of 7.9% in February. 

Having argued for much of 2021 that inflation above the Federal Reserve’s 2% target would prove to be transitory, prominent American regulators and legislators have stated that the phenomenon will be more longlasting. 

Last week, US Treasury Secretary Janet Yellen said that Americans will likely see “uncomfortably high” inflation this year. The former Fed chair argued that this trend was more a product of supply chain disruption and the economic fallout of Russia’s invasion of Ukraine than record levels of stimulus and quantitative easing in the US. 

Musk’s remarks

Against this background, Elon Musk asked his 77 million Twitter followers for their thoughts on the probable inflation rate over the next few years.

In response, MicroStrategy CEO Michael Saylor, who is among the most vocal advocates of bitcoin, said: 

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“USD consumer inflation will continue near all time highs, and asset inflation will run at double the rate of consumer inflation. Weaker currencies will collapse, and the flight of capital from cash, debt & value stocks to scarce property like bitcoin will intensify.”

Describing Saylor’s forecast as “not entirely unpredictable,” the Tesla and SpaceX CEO said:

Dogecoin rose to prominence in 2021, largely due to Elon Musk’s semi-ironic support. The capitalisation of the meme-inspired cryptocurrency briefly tested $90bn last May. Around the same time, Musk jokingly admitted while hosting Saturday Night Live that dogecoin and his support for it were “a hustle”. 

The cryptocurrency rose by as much as 10% after Musk’s latest intervention, reaching $0.119. In the wider picture, however, dogecoin’s fortunes can be said to have steadily reversed since the heady days of last May. 

It has fallen by 33.4% since the start of 2022 and stands 84% below the $0.7376 record high that it reached 10 months ago.

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