DOGE out of control? Social media and whales sway Dogecoin price action

Dogecoin (DOGE) has been the discuss of the crypto city within the month of April. On the primary day of the month, it was buying and selling in its standard $0.05 vary. On April Fools’ day, Tesla CEO Elon Musk tweeted concerning the coin but once more. His tweet learn, “SpaceX is going to put a literal Dogecoin on the literal moon” — SpaceX being the aerospace firm that Musk additionally based. Although the tweet was meant as a joke, it set the Shiba Inu-themed meme token on a rally like no different.

Within two hours, the price rose by more than 35% to a peak of $0.07 earlier than cooling off briefly however nonetheless holding on to its positive aspects. The subsequent spike in price got here on April 14, with the worth of a single token doubling inside a single day to interrupt the $0.10 mark. This led Musk to once more flip his consideration towards the coin, tweeting an image of the well-known portray by Spanish artist Joan Miró, saying “Doge barking at the moon.” This tweet, together with the rising social sentiment, pushed the price to a excessive of $0.45 on April 16.

Kristin Boggiano, president and co-founder of CrossTower — a digital property change — gave a number of causes behind the surge in a dialog with Cointelegraph: “First, Coinbase listing has generated interest and buzz about crypto in general. Second, the popular Reddit forum ‘r/Wallstreetbets’ changed their rules for a day to allow discussion of crypto, which included DOGE.”

The price surge took Dogecoin all the way in which as much as rating fifth within the high 10 cryptocurrencies by market capitalization. The market cap additionally briefly passed the $50-billion mark, which is a excessive determine for a coin that was conceived as a joke. At the time of writing, it has now slid all the way down to rank seventh among the many high 10, with a market capitalization of $36.45 billion. The price can also be presently in correction buying and selling at $0.28.

Eric Berman, senior authorized editor, U.S. finance at Thomson Reuters, commented to Cointelegraph relating to Dogecoin’s retail demand: “The sentiment seems to be: Bitcoin is for the wealthy, Ethereum for the middle class, and Dogecoin is for the people.”

Doge Day marks a historic second

Dogecoin followers celebrated April 20 as Doge Day with a symbolic push of the coin’s price to $0.420. It additionally wasn’t misplaced on the neighborhood that 4/20 was additionally related to the marijuana day. Even although it was only for a quick second, the neighborhood did seemingly come collectively to push the price of DOGE to its all-time excessive.

The rise in retail curiosity in Dogecoin even led to a system outage in Robinhood’s buying and selling app as a result of overload of orders. To make the coin extra accessible to retail traders, on April 21, Robinhood even reduced the minimal order dimension of DOGE from 10 to 1. This entails that traders can now stack DOGE one coin at a time.

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Joshua Frank, co-founder and CEO of The TIE — a social media analytics platform for cryptocurrencies — revealed that the social media sentiment for Dogecoin nonetheless holds sturdy, telling Cointelegraph:

“Long-term sentiment for DOGE went outside the standard deviation and posted a record 139 sentiment score on Jan. 28, 2021, after Redditors from r/SatoshiStreetBets discussed making Dogecoin the cryptocurrency equivalent of GameStop. Sentiment still holds strong at 72, and tweets from Elon Musk about Dogecoin on April 14 have helped fuel the surge.”

Since Dogecoin was based in 2013, it’s primarily one of the older cash within the cryptosphere. The itemizing of the token on exchanges like Binance and OKEx has strengthened its presence within the cryptocurrency neighborhood with higher entry to liquidity, thus creating extra steady buying and selling flows and curiosity in coin accumulation.

OKCoin announced on Doge Day that the change could be itemizing the token within the final week of April. Speaking additional about DOGE, Jason Lau, chief working officer of OKCoin, instructed Cointelegraph:

“DOGE is relatively well suited for payments. It’s extremely fast and efficient — transactions cost less than a cent. Though it has less nodes than others, it is secured by proof-of-work and has never had any security issues.”

DOGE is presently used as a payment method for merchandise of NBA franchise Dallas Mavericks, which is owned by famend investor Mark Cuban. He pointed out on Twitter that merchandise gross sales have grown 550% for the reason that membership introduced that it could be accepting funds in Dogecoin. He additionally said that the sports activities staff won’t be promoting any of its collected Dogecoin from the gross sales and shall be hodling it for the long run.

However, the sustainability of this rise in adoption is but to be seen. Lau additional stated: “It’s important to point out that the Dogecoin codebase has not had any update in years and is not actively maintained.”

Boggiano additional stated that for some merchants, the truth that Dogecoin was created as a joke turns into a enjoyable experiment to see if they’ll gamble in opposition to different merchants and come out forward, thus primarily getting used as a aggressive instrument:

“It may also be the crypto community ‘reclaiming’ their story. For people in the crypto community, we know that DOGE was created as a joke. It was created to mock Bitcoin. However, it’s turning out that Bitcoin is a legitimate asset class. Therefore, this could be a means to redefine the dialogue and understanding of cryptocurrencies in general.”

Could this be one more pump and dump?

Dogecoin has been an instrument for pump and dump schemes previously, so may this occasion be one more instance of such exercise? DOGE is a massively inflationary coin by design with no determined most provide, which entails that there are 5 billion new cash coming into the circulating provide every year. Due to the excessive provide, there’s at all times an limitless downward strain on the token.

On the chances of this being one other occasion of a pump-and-dump state of affairs, Frank additional said that the rally has been managed by a single entity that has collected at the least “$1.3 billion worth of Dogecoin and abused the futures market by baiting shorts into creating a negative funding cycle that led to a derivatives blowout in excess of $760 million of liquidations.”

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According to Twitter person Lightcrypto, the participant marked up the price of the token many occasions whereas feeding into the social media narrative surrounding the meme token. Apparently, the participant liquidated their spot holdings, creating over $760 million value of liquidations within the derivatives market. On the opposite, Berman opined additional on the surge in curiosity:

“The Dogecoin phenomenon seems little bit reminiscent of the Reddit/GameStop conversation from a couple of weeks back. While its popularity could be attributable in part to the recent Coinbase IPO, most cryptos would be experiencing a similar bounce. […] People [who] may feel like they missed out on the upside of Bitcoin are thinking that perhaps this is their shot.”

Although the price of Dogecoin is presently in a decline in what could possibly be seen as a market-wide correction, it’s turning into clear that the token has discovered a use past the meme-coin standing and is now seeing actual progress inside the cryptocurrency ecosystem.

At its top, its market capitalization even went previous long-existing multi-national corporations equivalent to Barclays and Ford. Speaking on the sustainability of the coin, Lau additional said: “I would not underestimate DOGE’s staying power. For many, it was the first crypto they owned or the first one they heard of. Plus, it’s one of the few tokens that have deeply penetrated beyond the crypto community.”