Dog out of control? Social media and whales are influencing Dogecoin price action

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Dogecoin (DOGE) was the talking point of the crypto city in April. The first day of the month traded in the usual range of $ 0.05. On April Fool’s Day, Tesla CEO Elon Musk tweeted again about the coin. His tweet read: “SpaceX will literally bring Dogecoin to the literal moon” – SpaceX is the aerospace company that Musk also founded. Though the tweet was intended as a joke, it put the Shiba Inu-themed meme token on a rally like no other.

In two hours, the price soared more than 35% to a high of $ 0.07 before cooling temporarily but still clinging to gains. The next price spike came on April 14th, when the value of a single token doubled in a single day to break the $ 0.10 mark. This prompted Musk to return his attention to the coin and tweet a picture of the famous painting by Spanish artist Joan Miró that read, “Doge barks at the moon.” That tweet, along with rising social sentiment, pushed the Price hit a high of $ 0.45 on April 16.

Kristin Boggiano, president and co-founder of CrossTower – a digital asset exchange – gave several reasons for the increase in an interview with Cointelegraph: “First, Coinbase’s listing has sparked interest and enthusiasm for crypto in general. Second, the popular Reddit forum “r / Wallstreetbets” changed its rules for a day to allow for a discussion about crypto, which DOGE was a part of. “

The rise in price led Dogecoin to fifth place in the top 10 cryptocurrencies by market capitalization. Market capitalization also briefly passed the $ 50 billion mark, which is a high number for a coin meant to be a joke. At the time of writing, it has now dropped to seventh place in the top 10 with a market cap of $ 36.45 billion. The price is also currently in correction trading at USD 0.28.

Eric Berman, senior legal editor for US finance at Thomson Reuters, told Cointelegraph about Dogecoin retail demand, “The mood seems to be: Bitcoin is for the rich, Ethereum is for the middle class and Dogecoin is for the people.”

Doge’s Day marks a historic moment

Dogecoin fans celebrated April 20th as Doge Day with a symbolic increase in the price of the coin to $ 0.420. It also didn’t get lost in the community that 4/20 was also associated with marijuana day. Although it was only for a brief moment, the community seemed to come together to bring the price of DOGE to its all-time high.

The surge in retail interest in Dogecoin even led to a system failure in Robinhood’s trading app due to the overloading of orders. To make the coin more accessible to private investors, Robinhood even reduced the minimum order quantity for DOGE from 10 to 1 on April 21. This means that investors can now stack one DOGE coin at a time.

Joshua Frank, co-founder and CEO of The TIE – a social media analytics platform for cryptocurrencies – announced that the social media sentiment for Dogecoin is still strong, telling Cointelegraph:

Long-term sentiment for DOGE went beyond the standard deviation, hitting a record 139 sentiment levels on January 28, 2021 after Redditors from r / SatoshiStreetBets talked about making Dogecoin the cryptocurrency equivalent of GameStop. Sentiment is still strong at 72, and tweets from Elon Musk about Dogecoin on April 14th helped fuel the surge. “

Since Dogecoin was founded in 2013, it’s essentially one of the older coins in the cryptosphere. Listing the token on exchanges like Binance and OKEx has strengthened its presence in the cryptocurrency community through better access to liquidity, thus creating more stable trade flows and interest in coin accumulation.

OKCoin announced on Doge Day that the exchange would list the token in the last week of April. Jason Lau, OKCoin Chief Operating Officer, continued on about DOGE, telling Cointelegraph:

“DOGE is relatively well suited for payments. It’s extremely fast and efficient – transactions cost less than a dime. Although it has fewer knots than others, it is backed up by a proof of work and has never had any security issues. “

DOGE is currently used as a method of payment for merchandise from the NBA franchise Dallas Mavericks, owned by renowned investor Mark Cuban. He pointed out on Twitter that goods sales have increased 550% since the club announced it would accept payments in Dogecoin. He also stated that the sports team will not sell any of their accumulated Dogecoin from sales and will harass them in the long term.

The sustainability of this rise in acceptance remains to be seen, however. Lau continued, “It is important to note that the Dogecoin codebase has not been updated in years and is not actively maintained.”

Boggiano went on to say that for some traders, the fact that Dogecoin was created as a joke becomes a fun experiment to see if they can play against other traders and prevail, and thus essentially be used as a competitive tool:

“It may also be that the crypto community is” taking back “its history. For folks in the crypto community, we know that DOGE was created as a joke. It was created to mock Bitcoin. However, it turns out that Bitcoin is a legitimate asset class, so this could be a means of redefining the dialogue and understanding of cryptocurrencies in general. “

Could this be another pump and dump?

Dogecoin has historically been an instrument for pump and dump systems. So could this instance be another example of such activity? By nature, DOGE is a hugely inflationary coin with no set maximum supply, meaning 5 billion new coins enter circulation every year. Due to the high supply, the token is always pushed down endlessly.

Commenting on the possibilities that this is another example of a pump-and-dump scenario, Frank went on to say that the rally was controlled by a single company that accumulated Dogecoin, valued at at least $ 1.3 billion, and Abused the futures market by attracting shorts creating a negative funding cycle that resulted in more than $ 760 million in derivative default on derivatives. “

According to Twitter user Lightcrypto, the player marked the price of the token several times while feeding into the social media narrative surrounding the meme token. Apparently, the player has liquidated its spot holdings and created over $ 760 million worth of liquidations in the derivatives market. On the contrary, Berman went on to comment on the surge in interest:

“The Dogecoin phenomenon seems a bit like the Reddit / GameStop conversation from a few weeks ago. While its popularity could be partly due to Coinbase’s recent IPO, most cryptos would see a similar boost. […] People [who] Maybe they feel like they missed out on the benefits of Bitcoin and think that maybe this is their shot. “

Although the price of Dogecoin is currently falling, which could be viewed as a market-wide correction, it is clear that the token has found use beyond meme coin status and is now seeing real growth within the cryptocurrency ecosystem.

At its peak, market cap even passed long-standing multinationals like Barclays and Ford. Lau went on to explain the sustainability of the coin: “I would not underestimate the stamina of DOGE. For many, it was the first crypto they owned or the first they heard about. Plus, it’s one of the few tokens that has penetrated deep into the crypto community. “