Elon Musk compares meme coins to casinos, warns investors against 'Betting the Farm'

March 4, 2025

Elon Musk compares meme coins to casinos, warns investors against 'Betting the Farm'

In a candid conversation with comedian Joe Rogan on The Joe Rogan Experience, Tesla and SpaceX CEO Elon Musk likened investing in meme coins to gambling at a casino, cautioning investors against pouring their life savings into such volatile assets. Musk’s comments come amid a broader discussion about the risks of speculative investments in the cryptocurrency market, particularly as meme coins like Dogecoin, Shiba Inu, and others continue to capture public attention.

Meme coin frenzy and the greater fool theory

Musk’s remarks come amid a market downturn that has seen the prices of popular ones, including Dogecoin and Shiba Inu, swing wildly. While Dogecoin remains one of the more resilient meme coins, currently boasting a market cap of around $30 billion, the broader meme coin sector has been hit by waves of speculation, hype, and eventual price crashes.

“It’s like a casino or something. And then people just do the greater fool theory—like musical chairs, and whoever is the last to sit down loses,” Musk explained.

He reiterated his stance, cautioning investors: “If you expect to win at meme coins, you’re being foolish. You’re not going to win. Don’t sink your life savings into a meme coin… don’t bet the farm.”

Trump-themed coin and market speculation

The latest meme coin cycle peaked last year with a frenzy fuelled by platforms that allow tokens to be created and traded in seconds. This hype culminated in the launch of a Donald Trump-themed meme coin, which initially soared past $60 before crashing back below $14.

Crypto research firm 10x Research noted that meme coin speculation may be cooling as investors realise that insiders accumulate large holdings early, push hype through major exchanges, and exit at high valuations—leaving retail investors with significant losses.

“The issue isn’t just price declines—it’s the realization that insiders could accumulate large amounts early, leverage major crypto exchanges for liquidity, and then sell to retail investors at inflated prices,” Markus Thielen, founder of 10x Research, told Forbes.

Regulatory concerns and SEC’s stance on meme coins

This discussion has also reached regulatory bodies. Last week, the U.S. Securities and Exchange Commission (SEC) issued new guidance stating that most meme coins are not classified as securities. The agency reasoned that meme coins are primarily driven by speculation, similar to collectibles, and do not meet the legal criteria of an investment contract under the Howey Test.

However, the SEC clarified that fraudulent activities involving meme coins would still fall under regulatory scrutiny.

Musk’s relationship with Dogecoin

Despite his warnings, Musk has a well-documented history of supporting Dogecoin, which he helped propel into the mainstream through endorsements on social media. His influence over the token remains strong, with Dogecoin often experiencing price surges following his tweets or public remarks.

Musk’s involvement has even extended to real-world applications. The Department of Government Efficiency, a federal initiative Musk played a role in creating, is humorously abbreviated as “D.O.G.E.,” a nod to Dogecoin. However, his latest remarks suggest that while he still finds such coins amusing, he recognises the speculative dangers they present to investors.

While some traders see them as opportunities for quick gains, the reality is that many of these coins experience drastic price swings, leaving retail investors exposed to significant losses.

As Musk puts it, “At the risk of saying something bold and outrageous—don’t bet the farm on a meme coin.”