The billionaire entrepreneur responded to a Twitter thread speculating on his Dogecoin holdings by saying, “I haven’t and won’t sell any.”
That caused the cryptocurrency, which Mr Musk has regularly promoted on social media, to sharply jump in value after days of slumping in price.
Earlier Mr Musk, the CEO of Tesla and SpaceX, had posted a picture on Twitter of a laptop with a sticker of a one dollar bill on it, and the caption “How much is that Doge in the window.”
And when social media users looked closer, the dollar bill had an image of the Doge Shiba Inu dog on it in the place of George Washington.
It is the second time this week that Mr Musk has publicly come to the defence of cryptocurrencies, after tweeting out that Tesla would hold on to its Bitcoin as the market crashed.
He had come under criticism from social media users , some of whom suggested he had sold his Bitcoin holdings at the top of the market.
He responded by tweeting out that the electric car company had “Diamond hands”, in reference to traders who hold onto stocks as their price drop with the goal of longterm profit.
The slide in crypto values started after Mr Musk tweeted that Tesla was suspending taking Bitcoin as payment for its vehicles because of concerns of the environmental impact of Bitcoin mining.
He has since said that the company will hold its Bitcoin and allow its use for purchases again when the mining is more sustainable.
The Cambridge Centre for Alternative Finance has estimated that the annual energy consumption of the Bitcoin industry is on a par with that of a country the size of Malaysia.
And that most of the mining operations are based in areas of China that produces cheap electricity using coal-fired power plants.
Tesla bought $1.5bn worth of Bitcoin at the end of 2020 when the price was under $20,000 and sold of 10 per cent in early 2021 when the price topped $50,000 for a profit of $101m.
When he appeared on Saturday Night Live last month he repeatedly plugged Dogecoin and jokingly called it a “hustle” during one sketch.