The cryptocurrency has evolved at the behest of new and exciting coins such as DOGE and Shiba Inu (SHIB). Their movement through the top alternative currency rankings has noticeably ridden on the coattails of influencers, among them Elon Musk. The Tesla CEO has spent the last year backing Dogecoin via Twitter, and his influence has caused value crests and troughs in other tokens.
His frequent backing of DOGE caused the currency to rise into the top 20 most popular altcoins, with notable surges as he posted memes to his 60.8 million-strong Twitter following.
Last week, Mr Musk posted a picture of his Shiba Inu puppy, helping to nudge SHIB’s value upwards by more than 350 percent.
He also inspired developers, who have now named two new coins after the new Musk arrival, Floki Frunkpuppy.
Both have made quick gains, making people a lot of money, but experts have warned against piling faith in the machinations of a celebrity.
Michael Kamerman, CEO of Scandinavian trading company Skilling, said that while these influencers have helped to ignite interest, they can ultimately cause losses too.
He told Express.co.uk people shouldn’t buy currency on the whim of a prominent figure.
Mr Kamerman said: “Sparked by social media, Shiba Inu is continuing to soar and is now ranked as the world’s 12th largest crypto.
“The cryptocurrency movement is centred around the masses and where they flock for information.”
“As we’ve seen with Dogecoin, and now Shiba Inu, tweets from magnates such as Elon Musk control the digital asset’s rise and fall.
“Social media and financial influencers are great at introducing the concept of cryptocurrency, but investors need to recognise the entertainment value that occurs online, and look deeper into crypto themselves before making any decisions.
“It’s a high-risk investment, and as with any investment, you need to understand what you’re investing in and make a rational, emotionally intelligent decision.
“Crypto is what is moving, and as a result, it’s likely that we’ll see more and more platforms offering the assets.”
Why is the crypto market so volatile? – EXPLAINER
The THREE questions investors should ask as Tesla CEO amid SHIB surge – INSIGHT
Will Shiba Inu coin reach $1? Expert analysis as token SURGES by 189% – ANALYSIS
Mr Kamerman’s claims have roots in real-life evidence, once again centred around Mr Musk.
In May, his announcement that Tesla would no longer accept Bitcoin as payment for electric car models caused its value to fall off a cliff.
Citing environmental concerns, he said the manufacturer would temporarily cease transactions, promptly knocking $2.43 trillion off the market.
He has since told reporters Tesla will “likely” accept Bitcoin again.
The same month, Mr Musk also knocked Dogecoin into a spiral.
During an appearance on US comedy show Saturday Night Live, he played a character who joked Dogecoin was “just a hustle” and caused a mass sell-off that sent it plummeting 40 percent.
Other celebrities have received harsh criticism for promoting little-known currencies and jumping ship when the value spikes.
These “pump and dump” schemes have lost their fans significant capital.