In a recent podcast with Joe Rogan, Elon Musk warned investors that meme coins are akin to gambling, despite him previously also supporting Dogecoin.
Elon Musk Criticizes Meme Coins
Elon Musk recently went on the popular Joe Rogan Experience to talk about various subjects with the titular host of the show. One of the topics both men discussed was cryptocurrencies, specifically meme coins, which Musk compared to gambling.
His comments triggered a strong response within the crypto community, creating a divide between those who support his view and those who feel it is overly simplistic and unjust.
“It’s like a casino or something like that. And then people just stick to the Greater Fool Theory, like musical chairs, and the one who sits last loses.”
Elon Musk
Musk further warned investors to be cautious about betting on speculative digital assets. The eccentric billionaire also stated that investors would not win at meme coins and that they should not sink their life savings into such cryptocurrencies.
Musk compared the investment into meme coins with the “greater fool theory.” According to it, in finance, the greater fool theory posits that it’s possible to profit by speculating on overvalued assets, relying on the assumption that someone else will pay an even higher price. For example, the “lesser fool” might pay for an overpriced asset, hoping that they can sell it to an even “greater fool” and make a profit.
This strategy only succeeds as long as there are enough new “greater fools” willing to pay increasingly higher prices for the asset. Eventually, investors can no longer ignore the fact that the price is disconnected from reality, leading to a sell-off that may cause the price to plummet significantly, potentially even dropping to its true value, which in some cases could be zero.
Joe Rogan shared Musk’s concerns, saying the hype around meme coins is irrational. He questioned why people keep investing real money in such speculative assets, especially as market instability grows.
Musk Has Previously Supported Some Meme Coins
While Elon Musk warned investors of meme coins during his appearance on Joe Rogan’s podcast, it should be noted that the billionaire has in the past avidly supported Dogecoin.
Dogecoin is a cryptocurrency that started as a joke in 2013, inspired by the popular “Doge” meme featuring a Shiba Inu dog. It quickly gained a dedicated following and became widely used for tipping content creators and making donations online.
Musk described his previous support for Dogecoin as a lighthearted project rooted in humor. However, it should be noted that even the name of the Department of Government Efficiency (DOGE), a federal government initiative created by the tech mogul, is also linked to the meme coin.
