Why Dogecoin Is Sinking Today

The price of Dogecoin (CRYPTO: DOGE) is sinking on Tuesday. The meme coin saw its value decline 4.6% from Monday at 4 p.m. ET to 12:43 p.m. ET Tuesday. The drop comes as the S&P 500 lost 0.2% and the Nasdaq Composite lost 0.8%.

Dogecoin's most prominent backer, Elon Musk, is once again involved in a public spat with President Donald Trump.

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The Musk-Trump feud reignites

Musk's unofficial role as the "Dogefather" has left the cryptocurrency tied to Musk's public actions. His backing of Trump's presidential run and subsequent place in his administration as the head of the Department of Government Efficiency (DOGE) -- a not-so-subtle wink to Dogecoin -- propelled Dogecoin to heights not seen since 2021. The price more than doubled in the days following the election.

Image source: Getty Images.

Musk left DOGE after a public spat with Trump, which has been mostly dormant for the last month. However, yesterday the feud reignited with a fresh round of attacks from Musk of Trump's One, Big, Beautiful Bill. This garnered a response from Trump that included the president calling for DOGE to review the subsidies Musk's companies receive, saying there is "BIG MONEY TO BE SAVED!!!"

Dogecoin isn't a serious investment

Dogecoin is a meme coin. Its value is derived not from utility, but from vibes. That makes it incredibly volatile and subject to wild swings in price. Its recent price appreciation was built entirely on the hype that surrounded Musk's place at Trump's side, so when that goes away, so does the hype. I would not put my money in Dogecoin.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.