Dogecoin (DOGE) has been in a bullish rally, recording a 20% price increase after Tesla, the renowned electric vehicle and clean energy company led by Elon Musk, introduced the cryptocurrency as a payment method for specific products on its online store. The update was confirmed via a detailed FAQ section on Tesla’s official website, explaining that Dogecoin can now be used for transactions.

At press time, DOGE was trading at $0.1605, a 6.40% surge from the intra-day low of $0.1502. Concurrently, the 24 hour trading volume and market capitalization surged by 95% and 6.50% respectively to $2,911,697,159 and $23,143,158,208. 

DOGE/USD 24 hour price chart (source: CoinMarketCap)

Tesla Embraces Dogecoin

Tesla’s recent update indicates a significant embrace of Dogecoin, with the FAQ stating that Dogecoin will be the only digital currency accepted for the purchase of select Tesla merchandise. 

Customers wishing to use Dogecoin for purchases need to have a Dogecoin wallet, and the exact amount of Dogecoin required for the transaction must be transferred. Overpayments will not be refunded, and underpayments will lead to a cancellation of the order. Moreover, Tesla’s system is set up to handle payments from a single wallet per order.

This integration not only simplifies the payment process for tech-savvy consumers but also highlights Tesla’s commitment to leveraging innovative technology solutions within its business model.

Market Reaction and Cryptocurrency Trends

Following the announcement, Dogecoin experienced a notable increase in trading activity and network usage. Data from IntoTheBlock reveals that the cryptocurrency added 28,000 new addresses in a single day, representing a 102% increase from its monthly low. Meanwhile, data analytics firm Santiment reported that the number of daily active Dogecoin addresses increased by 27% within the week of the announcement.

The price of Dogecoin reacted vigorously to this news, jumping by 20% to a trading price of $0.16. This spike in value was accompanied by a surge in trading volume, indicating heightened market interest and speculation regarding the future of Dogecoin, particularly in connection to its adoption by mainstream entities like Tesla.

DOGE Active Addresses

Tesla’s decision to adopt Dogecoin as a payment method could have broader implications for the cryptocurrency market. By endorsing Dogecoin, Tesla may encourage other companies to consider the integration of cryptocurrencies into their payment systems, potentially leading to increased acceptance and use of digital currencies in mainstream commercial transactions.

Furthermore, this move might inspire increased competition among cryptocurrencies for market share in the commercial sector, enhancing overall market growth and innovation.

Opportunities for Investors and Traders

The inclusion of Dogecoin as a payment method by Tesla might also present new opportunities for investors and traders. The increased demand and network activity serve as positive indicators for Dogecoin’s market sentiment. 

The Market Value to Realized Value (MVRV) ratio, a measure used to assess the profit or loss of holders of a particular cryptocurrency, indicated that Dogecoin might be undervalued, as the 30-day moving average stood at -12.83%.

Dogecoin MVRV Ratio

This metric suggests that Dogecoin could be positioned for further gains, potentially making it a lucrative buy for speculative investors looking for opportunities in the volatile cryptocurrency market.