Two pumps. One dump. 🐕
Did TikTok users scam better than Elon?
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It was the last place I expected to see it.
Social media is home to market influencing more and more. We see it with Elon Musk tweeting about Tesla. r/wallstreetbets posting about Lumber Liquidators...
But, TikTok? The beloved Gen-Z app? The Chinese spyware?
Whenever I want to distract myself, I fire up TikTok. Their algorithm force feeds me videos I enjoy.
Two weeks ago, the app served me up a clip that had a mix of memes, investments, and persuasion.
In the video, user @jamezg97 panned over data points and exclaimed,
"Let's all get rich! Dogecoin is practically worthless. There are 800 million TikTok users. Invest just $25. Once the stock hits $1, you'll have $10 grand! Tell everyone you know."
It was a classic pump and dump in pyramid principle format. 938k views and 74k likes later, that video kickstarted the “Dogecoin Challenge” or what I consider, the internet’s most playful scam.
Disclosure: Pump and dumps (like this) are considered securities fraud.
To back up, Dogecoin itself started in 2013 as a joke. The founder, Jackson Palmer, wanted to drive awareness to cryptocurrency. He thought a fun alternative to Bitcoin could do just that.
As the project gained traction, it sadly attracted trolls. This is why we can’t have nice things. Palmer didn’t want to keep fighting them and he left Dogecoin in 2015. As he wrote in a reflection,
“However, as I quickly learned, a passionate community of people throwing around money is like blood in the water to the shark-like scammers and opportunists who, in late 2014, co-opted the Dogecoin community and fleeced its members for millions of dollars.”
The community survives to this day, mainly as a subreddit that memes the cryptocurrency.
TikTok users vs Elon
Now if the subtitle looped you in, you’re probably wondering what does he mean by “Did TikTok users scam better than Elon?”
Well, there were two Dogecoin pumps in the last month. First by TikTok users, and then by meme stock CEO icon, and previous Dogecoin supporter, Elon Musk.
There are confounding factors here, but in short, in this ‘head to head battle’, TikTok users were better pumpers than Elon. In fact, they were able to move Dogecoin’s price 5 times more than him.
Why is that so? Let’s dig deeper.
The TikTok Pump
The TikTok pump was a ‘bottoms up’ phenomenon. It was started by a non-powerful user and took two weeks to catch on. No individual video alone drove significant trading volume, yet collectively, they made an avalanche. The Dogecoin hashtag has 16.3M views on TikTok as of publishing.
I believe there were three milestones in TikToks pump.
The first milestone was the kickoff. On June 27th, user @tradertoks introduced the scam.
“Here’s a crazy thought. What if everyone watching this video went and bought some Dogecoin? Now obviously I would never suggest this, but could they really stop us? Could they stop us all?”
The second milestone was helping the trend take off. @jamezg97 (mentioned above) produced his video, co-signing the idea. This helped give the pump legitimacy to the community. This video grew to be the most popular video in the challenge.
Finally, the third video on TikTok helped channel that energy into action. User @kindashortidiot (fitting username) had an explicit call to action on July 6th. He spoke in a way that made sense to the non-investor. At 50k likes, this was the second most popular video in the challenge.
“Everybody, please listen to me. This is Dogecoin. If you know nothing about investing, it doesn’t really matter. Go put $25 into this, and that will be 10,000 shares, okay? And if this reaches $1, you will have made 10 grand! Please, just try it out. Go pump it!
@kindashortidiot was kinda right. A snowball of more TikTok user videos popularized the challenge into an avalanche. The challenge spilled onto other social media like Reddit, Twitter, and Facebook, only amplifying the pump.
In the end, TikTok users’ inside joke made a dent. Compared to pre-challenge levels, the TikTok pump spiked trading volume up to eight times from when the first video was posted. While the price did not 400x like he wanted it to, it did more than double!
Elon’s Pump
Compared to TikTok users, Elon’s pump was a top down phenomenon.
On July 17th around 9pm eastern, his Dogecoin pump began. He tweeted this to his 37M followers.
Within just over an hour, prices jumped ~18%!
He then tweeted again (now deleted) about Dogecoin the next day around the same time. This moved the prices up 5% within 45 minutes.
When all was said and done, Elon pushed Dogecoin’s price up by a max of 20% and doubled trading volumes.
Now while that’s impressive, it wasn’t near what TikTok users did. This was one-fifth of their efforts on price and a quarter the impact on volume.
What to make all of this?
As mentioned before, there are confounding factors here. That said, I’ll leave you with this tongue in cheek quote:
“Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has.” - Margaret Mead
See you tomorrow,
Notes: Thanks for the responses to yesterday's post! 16 of you let you know what stocks you are interested in running the first WTF on. If you’re reading this, I’d love to learn yours too. Feel free to reply to this email.
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