How Elon Musk caused Dogecoin, Shiba Inu, and BNB to spike again on Monday

Talk about crypto payments on Twitter is heating up.

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This article was originally published on All figures quoted in US dollars unless otherwise stated.

What happened 

Elon Musk has owned Twitter for less than a week and he's already caused volatility to spike in some corners of the crypto market. It's no secret that Musk has long toyed with using Dogecoin (CRYPTO: DOGE) in some way in previous ventures and the speculation is that he'll use it at Twitter, albeit without any facts to back up wild moves. 

That hasn't stopped traders from bidding up potential winners of the Twitter deal on Monday. Dogecoin is up 10.6% in the last 24 hours as of 2:30 p.m. ET but at one time was down 10.3% in the last day, BNB (CRYPTO: BNB) is up 3.8% after falling 5.6%, and Shiba Inu (CRYPTO: SHIB) is up 3.1% after dropping 5.1% at its low. 

So what 

I'll start with what we know to be true. Binance was part of Twitter's funding, contributing about $500 million to the deal. It's not clear exactly what Binance CEO Changpeng Zhao sees in Twitter, but there are many potential opportunities. He said recently that Twitter users could be charged "very easily globally using cryptocurrencies" for services on the app. It's also been widely reported that Twitter's engineers are quickly developing a paid verification system. 

BNB, Dogecoin, and Shiba Inu are all rising on speculation that they could be part of any Twitter payment infrastructure. But there's still no news out from Twitter, Musk, or any of these tokens about any payment infrastructure existing at all. And even if they did, it's not clear that a company like Twitter using a cryptocurrency to get money from one person to another would actually increase the value of the token itself. 

Unsurprisingly, the move in these cryptocurrencies over the past week has been pure speculation, sparked by their association with Musk. But that's part of the cryptocurrency market and that's likely to be the case for the foreseeable future. 

Now what 

Volatility and speculation are part of investing in cryptocurrencies, but the moves in BNB, Dogecoin, and Shiba Inu over the past week have taken that to another level. 

Even if Twitter does begin using cryptocurrencies more, it's likely to start with more conservative cryptocurrencies like USD Coin (USDC), which it is already testing on the Polygon blockchain. The company partnered with Stripe earlier this year to allow creators to take payments in USDC, lowering barriers for international payments. 

There are other blockchains that would be lower cost and more widely accepted than BNB, Dogecoin, and Shiba Inu, which are still relatively niche tokens right now. 

No matter what Twitter's moves are, I'm not sure there's ultimately a lot of value to be added by cryptocurrencies. I don't think the future of Twitter is building a digital economy, but rather moving money more efficiently around the world. Crypto could simply be how Twitter moves its money, not necessarily something users would hold long-term. That's why I think this speculative move is a reason to stay out of these cryptocurrencies until we know more about Twitter's crypto future. 

This article was originally published on All figures quoted in US dollars unless otherwise stated.

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.  

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