Tesla CEO Elon Musk said today that he would support the top holders of Dogecoin selling a big portion of their DOGE stash to ease out the altcoin’s distribution, as per a tweet this morning.
Whether that is a joke or not, Dogecoin’s wealth concentration issue is real. Reports suggest a single entity holds over 27% of the altcoin’s entire market cap, valued at over $7 billion at press time. That puts the entity’s holdings at over $1.8 billion, or about the GDP of a mid-sized island nation as of today.
In addition, the top twenty DOGE addresses hold more than 50% of the altcoin’s current circulating supply (over $3.5 billion). While these could likely be crypto exchanges holding Dogecoin as a reserve in their cold wallets, they have not been acknowledged by any exchange so far.
Musk insists that this must change for the better. “If major Dogecoin holders sell most of their coins, it will get my full support. Too much concentration is the only real issue IMO,” he tweeted this morning.
Musk’s advocacy of the token may also not continue forever, his reply to a relevant tweet today suggested. A Twitter account said that if “whales” (a term for the large holders of Dogecoin) did not sell their tokens and continued to hold on, Dogecoin could lose Musk’s endorsement—a tweet to which the eccentric billionaire replied, “Yup.”
Dogecoin’s concentrated holdings mean a problem for the long-term fundamentals of DOGE (as with any other altcoin). The lack of supply means prices can be artificially and disproportionately driven up for the benefit of the few large wallets. And when such wallets finally choose to sell, the price of DOGE would, inevitably, crash.
Founded in 2013 as a joke cryptocurrency, Dogecoin’s meme value, the usage of a Shiba Inu dog as a mascot, and a cutesy narrative has pumped its market cap to billions of dollars over the years.
In recent weeks, celebrities, rappers, adult entertainment stars, and notably Musk himself (as the self-styled “CEO of Dogecoin”) have tweeted about the joke currency to their millions of followers —with such coverage pushing DOGE from under $0.004 to over $0.07 in the past two months alone.
But can whales selling their holdings save the so-called “people’s crypto”? Musk seems to think so.
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