Here’s what Elon Musk said about Dogecoin whales

The headlines in mid August 2022 are full of news about Dogecoin whale activity.

Here's the overview:

• The frequency of Dogecoin transactions worth $100k+ has spiked to a three-month high
• As a result, Dogecoin has pumped 14% in price over the past week
• Dogecoin hit its highest price so far since the crypto crash in mid May

The logical conclusion from many Twitter comments and headlines is this: whale activity is good for Dogecoin. While it may be true in the short term, it's worth remembering why whale activity is also bad for Dogecoin.

In this article we'll look at Elon Musk, a massive whale dump and how to combat whale games in crypto.

Elon Musk called whales the 'only real issue' in Dogecoin

Most people know that Elon Musk's Tesla holds Dogecoin. Probably a lot of Dogecoin. But just because Elon Musk has been behind countless spikes in the DOGE price it doesn't mean that large holders are unequivocally good for a cryptocurrency.

As a matter of fact, Musk sees it as the biggest enemy of Dogecoin.

Writing on Twitter last year he said:

"If major dogecoin holders sell most of their coins, it will get my full support.

"Too much concentration is the only real issue imo … I will literally pay actual $ if they just void their accounts."

The Tweet got around 300k likes and in follow-up Tweets Musk later said that Doge was too 'concentrated' in the hands of a few whales. Looking at the data today, it's evident that not a lot has changed.

Just 108 Dogecoin wallets own 26% of DOGE, according to BitInfoCharts.

And it was one of these whales that gave Dogecoin its most significant crash to date.

The whale that halted the Dogecoin all-time high

Dogecoin hit an all-time high of $0.7376 on May 8 last year.

If you've read about Dogecoin, you'll know this figure – but you probably don't know that DOGE crashed to $0.39 just four days later. Such a fall would have left people 50% down on their portfolio had they bought around the high.

So what was behind the plummet?

Of course, selling is the answer. But one whale in particular was responsible for dumping 1.1 billion DOGE on May 8. The transactions were identified in a Reddit post. The OP claimed the whale made a 'deliberate attempt to crash the coin so they could buy back in cheaper'.

If you follow the wallet's history on BitInfoCharts this is exactly what happened: the whale bought back 1.1 billion DOGE and pocketed around $360,000 profit.

This same pattern of pump and dump continued until the whale made a total profit of $422,684,830 – admittedly the whale had bought up DOGE years before the all-time high, but the whale had also gathered enough power to move the market price of Dogecoin.

This is the problem facing not just smaller Dogecoin investors, but the currency itself.

Why are whales bad for Dogecoin?

The central idea underpinning Elon Musk's backing of DOGE and the Dogecoin Foundation itself is simple.

Making Dogecoin an alternative digital currency to fiat.

You might not have raised an eyebrow at that, but think again. The purpose of Dogecoin is not to go through price volatility and speculation but to remain as stable as possible. Dogecoin is an inflationary token – and to people like Musk and Mark Cuban this is a benefit.

Why?

Because although Bitcoin has seen widespread adoption, there are not many people who would use Bitcoin every day to buy groceries, pay for taxis or buy subscriptions.

Who would spend an asset that could double or triple in price before the year is out?

If they're serious investors, not many.

When a huge supply is concentrated in the hands of a few whales – and these whales are out to make a profit – it goes against what Dogecoin developers and key backers want for the token. This is why there's a consistency with Musk offering to buy out Dogecoin whales and then allowing Dogecoin payments for merchandise, taxi rides in Las Vegas and to fill up a Tesla.

In other words, Elon Musk doesn't want Dogecoin to move around a lot in price.

Are there any cryptocurrencies that challenge whales?

Yes – and they're well worth checking out for crypto investors.

One of the tokens leading the space in 2022 is EverGrow. The EverGrow white paper talks about an 'anti-whale system' whereby any sells are limited to 0.125% of the circulating supply.

Such a tax would have blocked the Dogecoin whale above from selling so much DOGE.

But whale games are also not the only way to make money with EverGrow. The project aims to incentivise the long-term holding of $EGC tokens – and make it against the whale's interest to sell.

How does this work?

EverGrow charges a 14% transaction tax. The largest part of this tax – 8% – is redistributed to holders in the BUSD stablecoin. You pay the tax whether you buy or sell or transfer EverGrow.

The tax not only discourages rapid buying and selling, but also offers a mechanism to earn passive income from your investment.

This is exactly what EverGrow does. The project announced right at its launch late in 2021 how all team salaries would be earned via BUSD reflections on their own investments. The EverGrow chairman Sam Kelly, for example, earned $92,000 in 8.5 months from his own EverGrow holding.

He even published the address so anyone could audit his claims about never selling up.

And imagine if a whale did make a profit of $422,684,830 from buying and selling EverGrow? It would mean $33.8 million in BUSD rewards for all EverGrow holders.

Should I be worried about Dogecoin whales?

Dogecoin whales are a fact of any investment in DOGE.

They're still there. They're likely not going anywhere. So you need to learn to watch their movements and understand when a price plummet is just a whale move so they can buy back tokens at a higher price.

If you're buying up Dogecoin because you believe in its future as a decentralised currency for the Internet, then whales will be a problem.

And if this problem is too great a risk for you, then it's worth researching other projects that aim to temper the power of the most powerful whales. A project like EverGrow does a great job of redistributing some of this power back to the smallest investors.