Something very interesting is happening in the world of cryptocurrency right now. Popular meme coin Dogecoin (CRYPTO: DOGE) is up more than 30% over the past 30 days and has almost caught up with Bitcoin (CRYPTO: BTC) in terms of performance. For the year, Dogecoin is up 50%, compared to 60% for Bitcoin.

You can thank tech billionaire Elon Musk for that. Once known as "The Dogefather" for his support and promotion of Dogecoin during the previous crypto bull market rally, Musk appears to be renewing his support for this dog-themed meme coin. Over the past month, he has made a number of cryptic statements, suggestions, and social media posts regarding Dogecoin, all of them pointing to a huge incoming rally as we head into 2025.

The Elon Musk buy signal

The first thing you need to know about Dogecoin is that a single comment or suggestion from a high-profile individual such as Musk is enough to move its price. That's the nature of meme coins: They are built on hype and speculation, so even a suggestion that you might do something is just as good as saying that you will actually do it. The market is going to take that information and run with it.

So, for example, Musk has recently been promoting a new government efficiency initiative he plans to run under a Donald Trump administration that will be known as the Department of Government Efficiency. The abbreviation, of course, is DOGE.

Musk has been posting about it on X, the social media platform he owns. And he even name-dropped "Doge" at a recent campaign event in Pennsylvania.

He has also been leaving other clues about Dogecoin that involve other companies he runs. When asked about California potentially blocking future missions by SpaceX, his privately owned company, for example, his reply was a simple "D.O.G.E. can fix it." That, of course, was a reference both to the new proposed government efficiency initiative as well as previous suggestions that he would make Dogecoin the first interstellar cryptocurrency.

And what about the recent Tesla (NASDAQ: TSLA) launch event for the Cybercab? Attendees quickly recognized that one of the passengers in the Cybercab was none other than the Dogecoin mascot dog. That led to suggestions that Dogecoin integration with Tesla's autonomous vehicles might be coming soon.

For people who invest in dog-themed meme coins, all of these hints and suggestions function like dog whistles. They are clues that are meant to be audible to crypto investors, but not necessarily to anyone else. In the same way that politicians sometimes use coded language as dog whistles to energize their base, Musk appears to be using coded language to energize crypto investors.

Dogecoin 2.0?

During the previous crypto bull market rally in 2020-21, Dogecoin went on an absolutely epic run. All you have to do is view a chart from the past few years, and it's obvious: Just look for the huge upward spike in price.

The price of Dogecoin had been flat for years and was trading near $0.002 on Nov. 1, 2020. At the time, Dogecoin ranked as only the 44th most valuable cryptocurrency. But then meme coin mania took off, and it blasted off into the stratosphere. Just a few months later, it hit a new all-time high of $0.74.

That's why Musk's newfound support for Dogecoin is so exciting to crypto investors right now. Let's be honest here: It has nothing to do with a new Department of Government Efficiency. It's all about making a huge profit within a remarkably short period of time.

We're talking about making a 10x or even 100x return on a small up-front investment. That's the way meme coins work. Just a small amount of hype and speculation can set off a monster rally.

Before you buy Dogecoin, read this

Just remember: Dogecoin is still just a meme coin. There are no metrics or financial models to predict how well it will perform in the future. Once the current hype cycle ends, Dogecoin could collapse in value. This is what happened last time. After it hit an all-time high in May 2021, Dogecoin plummeted in value and never recovered.

The other big factor to keep in mind is that Dogecoin is no longer the only meme coin. We're currently in the midst of a new mania, in which thousands of new meme coins are being created on a daily basis. Yes, some of them are up 1,000% or more for the year, but for every meme coin that explodes in value, there are thousands that do not.

What has me most concerned about Dogecoin is that no new catalysts for growth have appeared over the past two years. In contrast, other meme coins have added new features in an attempt to transform themselves into utility coins. And still others have launched new blockchain upgrades in order to support a thriving, diverse blockchain ecosystem.

So if you still plan to invest in Dogecoin, don't say you haven't been warned. Elon Musk might be one of the brightest minds of our generation, but even he can't force investors to buy a digital asset that's backed by nothing more than hype and speculation.

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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Tesla. The Motley Fool has a disclosure policy.

Should You Follow Billionaire Elon Musk and Buy Dogecoin? was originally published by The Motley Fool