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The cryptocurrency market experienced a major rally at the start of the week, with Dogecoin (DOGE) leading the way. The DOGE price surged by over 35% after Twitter CEO Elon Musk changed his profile picture to the Dogecoin mascot, a Shiba Inu. The image remained without comment until Musk shared a cartoon drawing of the Dogecoin dog sitting in a car with his driver’s license being checked by a police officer. In the ID document, the Twitter logo can be seen in the place of the image, with the dog saying, “That’s an old photo.” As expected, Musk’s action received polarizing reactions from crypto Twitter. On-chain analytics service Santiment released an analysis of the sudden DOGE pump and its implications. The company’s Director of Marketing, Brian Quinlivan, noted that when Elon Musk does something on Twitter, it’s usually for the purpose of getting laughs, attention, or money. Santiment’s data showed that the discussion rates for Dogecoin “absolutely exploded.” However, the price spike ended almost immediately thereafter, followed by a second spike as the volume cooled over the inorganic surge.
According to Quinlivan, there were numerous top signals that indicated when key players exited the trade or at least took large profits. He also speculates that these players “probably knew about the planned DOGE pump.” Active addresses and circulating volume, trading volume and transaction volume, and whale transactions (over $100,000) increased rapidly, decoupling from the rest of the crypto market. According to the analyst, this was a “pretty solid bet” that the price formed a local top at $0.1047. However, an analysis of DOGE addresses divided by size into fish (0-10 DOGE), dolphins (10-10,000 DOGE), sharks (10,000-10 million DOGE), and whales (10 million or more DOGE) must be considered rather bearish.
While the smallest fish addresses bought aggressively when the price peaked, dolphins and sharks showed no signs of getting involved in the rally at the local top. Instead, their downward trend of the past six weeks continued. Whales were showing signs of accumulation before Musk’s action. However, interest plummeted when the DOGE logo appeared on Twitter, and the price hit its top. At press time, the DOGE price stood at $0.08910. A daily close above $0.08891 could be of significant importance to reignite the upside potential mentioned by Santiment.
The 30-day Market Value to Realized Value (MVRV) suggests that DOGE could have further upside potential, with the value currently at +11%. Typically, when altcoins hit +20% or more, this is a “danger zone.” However, since DOGE didn’t quite reach that high, even with the massive Elon-induced price surge, there could still be some extra cushion for prices to rise further. Overall, the recent surge in DOGE price caused by Elon Musk’s Twitter antics has created mixed reactions among crypto enthusiasts. While some see it as a fun way to get attention, others view it as manipulative and potentially harmful to the market. As with any investment, it’s essential to conduct thorough research and analysis before making a decision. Whether DOGE can continue to rise sustainably or drop back to its previous price level is something that only time will tell.
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