Photo Credit: Bloomberg
In the past few days, the value of Dogecoin has fallen sharply. One of the main reasons for the dip was China announcing a ban on cryptocurrency trading. However, despite the crash, Dogecoin is one of the few cryptocurrencies that has seen a stupendous rise as compared to its value at the beginning of this year. That rise was primarily credited to Tesla and SpaceX CEO Elon Musk, who often supported it on his social media accounts. In February though, he had warned that the biggest threat to Dogecoin was its extreme concentration among a handful of digital wallets.
That warning has again come back into focus now after reports emerged that a Dogecoin “whale” continues to hold billions worth of the meme currency in spite of the recent drop. Dogecoin address DH5yaieqoZN36fDVciNyRueRGvGLR3mr7L apparently holds nearly $12 billion (roughly Rs. 8,752 crore) worth of the digital currency.
According to data from Bitinfocharts, the Dogecoin “whale” first purchased the crypto on February 6, 2019, when it was trading at $0.0018 (roughly Rs. 0.13) per coin. Now, the investor has around 3,671 crore Dogecoins, which is about 28 per cent of the cryptocurrency's overall supply. Before the crash began two weeks ago, the valuation of the account's holdings had touched a whopping $22 billion (roughly Rs. 16,046 crore). At the time of writing, according to CoinMarketCap, Dogecoin was trading at $0.32 (roughly Rs. 23).
In February this year, Musk tweeted he will fully support major Dogecoin holders if they sell most of their holdings, saying too much concentration is the "only real issue".
If major Dogecoin holders sell most of their coins, it will get my full support. Too much concentration is the only real issue imo.— Elon Musk (@elonmusk) February 14, 2021
He even went on to add that he will pay them actual dollars if they emptied their accounts.
I will literally pay actual $ if they just void their accounts— Elon Musk (@elonmusk) February 15, 2021
In the world of finance, a "whale" is an entity with enough power to impact the market of an asset by triggering massive transactions. The main problem with whale accounts accumulating billions worth of Doge is that they can influence the market single-handedly if they decide to sell.
Whales will have to consider Elon's ultimatum here.— ???????????? (@itsALLrisky) February 15, 2021
If they comply, #Dogecoin becomes the currency of the internet.
If they don't, or "cheat" by distributing their coins across multiple wallets, then it loses Elon's endorsement.
Easy decision for the whales. Do the right thing
That's not why it tanked. There was a massive WHALE sell worth 100s of millions of doge coin which was accompanied by mass panic sell by regular holders. He just took advantage of the situation and people's emotions. This was expected. Doge will rise again for sure. HODL ???? ???? pic.twitter.com/3VUJ597tik— Goodboi DOGE (@dogeonluna) May 9, 2021
There has been massive speculation about who could be behind this mysterious whale account, and many suggested Musk, being the ultimate "hodler", himself could be the owner.
What if @elonmusk is the mysterious bitcoin whale who bought $100 Million worth last night? But he can't tweet about it, so he talked up Doge instead.— Ethereum West (Not-A-Security) (@EthereumWest) April 2, 2019
Dogecoin was launched in 2013 and has the image of a Shiba Inu dog as its logo. It was the brainchild of techies Billy Markus and Jackson Palmer, who started it merely as a joke to sidestep traditional banking fees in 2013 when it was trading around $0.000232 (Rs. 0.017).