Crypto Conversation: Elon Musk’s Bark About Dogecoin Has Some Bite

Dogecoin. It was created in 2013 at the height of the “Doge” meme craze because its founders thought that crypto was being taken too seriously. What started off as a complete joke expanded out into more serious endeavors, with the community raising money to fund the Jamaican bobsled team in 2014 and water wells in Kenya the same year. However, later that year a major scam divided the community, and Dogecoin co-founder, Jackson Palmer, eventually left the network.

Why it it hot?

Tesla  (TSLA) – Get Report boss Elon Musk recently tweeted that Dogecoin’s issue is that it is too concentrated.

Not long after, the Wall Street Journal reported that one address owns more than a quarter of all $DOGE in circulation — or 36.8 billion Dogecoin, which is worth about $2.1 billion at current prices. The paper also found that the top 20 holders own nearly half of the total supply.

What’s Flipside’s take?

To assess whether this position was abnormally large, we compared it to other major chains that are similarly structured. Specifically, we looked at what percent of the liquid supply the 50 largest addresses hold on each.

For reference, Dogecoin was a fork of Litecoin, which was itself a fork of Bitcoin — meaning they all tweaked the same source code. DASH was also a fork of Litecoin.

Here’s the breakdown of percentages of supply owned by the 50 largest addresses:

Doge: 62%

Litecoin: 30.5%

Bitcoin Cash: 24%


DASH: 18%

Bitcoin: 10.5%

We also compared the same data across account-style chains:

Ethereum: 45%

TRON: 34%

Terra’s LUNA: 30%

That whales own over 50% of the total Dogecoin supply is concerning, not only for the security of the chain, which is very susceptible to a 51% attack, but also for the volatility of its token price. While large holders don’t really have an incentive to liquidate, they do have the power to do so — which is enough to deter new holders like Elon Musk from buying.

The fact that DOGE is abnormally concentrated in the hands of a few doesn’t come as a shock considering Dogecoin’s reputation: Most people never took it seriously while a few deeply believed in it. And considering what we know is driving the current outsized surge in Dogecoin interest, we should be very cautious about the longevity of this particular spike.

The Flipside Crypto Asset Score Tracker provides institutional and sophisticated retail investors the ability to track over 500 cryptocurrencies’ fundamentals. FCAS Tracker is currently free to a select group of new users as it continues to develop the product. Visit Flipside here to gain access to Flipside Analytics.

Leave a Comment

You may also like

Read More