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

Talk about crypto payments on Twitter is heating up.

| More on:
A graphic image of three upward pointing arrows with smoke coming from their bottoms, indicating the arrows are taking off just like the Althea share price today

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. 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 Fool.com. 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.  

More on International Stock News

A woman is excited as she reads the latest rumour on her phone.
Broker Notes

Goldman Sachs says this US stock is replacing Tesla in the Magnificent Seven

And no, it's not a tech company. It's in the healthcare sector.

Read more »

A man looking at his laptop and thinking.
Share Gainers

Should I buy Nvidia stock as an Australian investor?

Many Aussies are thinking of jumping on the bandwagon, but they need to think about these issues first.

Read more »

Digital rocket on a laptop.
Broker Notes

Is the Nvidia share price on course to reach US$1,400?

You betcha, says one analyst.

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Could Nvidia become the most valuable stock on earth?

Can anything stop the Nvidia stock price?

Read more »

A group of young ASX investors sitting around a laptop with an older lady standing behind them explaining how investing works.
International Stock News

What can ASX investors learn from Warren Buffett's latest buys and sells?

We've just found out what Buffett's been buying and selling recently.

Read more »

electric vehicle such as Tesla being charged at charging station
International Stock News

Why Tesla stock tanked in January

Will the electric vehicle leader see earnings decline once again in 2024?

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
International Stock News

Will Nvidia stock be worth more than Microsoft by 2030?

The graphics giant has been growing at a much faster pace than Microsoft, but can it sustain that momentum?

Read more »

Man with hands in the middle of two items with money bags on them.
International Stock News

Stock-split watch: Is Tesla next?

Stock splits are fun. But how much substance there is in Tesla splitting its stock is debatable.

Read more »