Dogecoin spikes more than 20% after Elon Musk says Tesla will accept it as payment for merch

Remember dogecoin?

The meme-inspired cryptocurrency skyrocketed as much as 23% on Tuesday after Elon Musk said Tesla would accept dogecoin as payment for some of its merchandise. It last traded 18.9% higher.

"Tesla will make some merch buyable with Doge & see how it goes," the electric auto maker's CEO said in a tweet.

Musk has frequently talked up dogecoin, calling it his favorite digital coin and mentioning it in an appearance on NBC's "Saturday Night Live."

Dogecoin was initially started as a joke by its creators Billy Markus and Jackson Palmer in 2013. It takes its branding from the Japanese shiba inu dog, which inspired the original "doge" meme.

Tweets from Musk and surging interest from a wave of amateur investors fueled a speculative frenzy in the cryptocurrency earlier this year, driving its price higher.

Dogecoin went from being worth just a fraction of a penny at the start of the year to notching a record-high price above 74 cents in May. It has since plummeted sharply — at just 20 cents a coin, the token is down more than 70% from its all-time high.

Some crypto investors say dogecoin is a phenomenon similar to "meme stocks" like GameStop and AMC and shouldn't be taken seriously.

"I'm actually not convinced ... that dogecoin is good for the crypto market," Brad Garlinghouse, CEO of crypto firm Ripple, told CNBC last month.

Dogecoin recently found a rival in shiba inu, a so-called meme token that bills itself as a "dogecoin killer." Shiba inu is currently the 13th-biggest coin by market value, having briefly surpassed dogecoin at one point.

Disclosure: NBCUniversal is the parent company of CNBC and NBC, which broadcasts "Saturday Night Live."