Anyone who has been in the cryptocurrency space in recent years will certainly be familiar with Dogecoin (DOGE) and how social media activity drives your pricing action. A “fork of a fork” based on Litecoin (LTC), the coin has earned a unique reputation and considerable cult status within the cryptocurrency space.
Unlike other projects, Dogecoin hasn’t seen any protocol updates or development since 2015. In fact, DOGE’s success stems more from community efforts and the power of memes than any tangible technical advance.
However, it would be incorrect to say that “coin” has zero utility. In fact, its early adoption came in the realm of microtechnology on social media. Dogecoin was one of the first examples of how cryptocurrencies could be used to monetize the content creation space. Instead of the usual “likes”, forum participants could receive more impactful recognition in the form of a meme coin with real value in US dollars.
The Dogecoin scene has such synergistic community participation that token holders supported NASCAR driver Josh Wise and the Jamaican bobsled team in a popular move back in 2014.
Who released DOGE?
Dogecoin briefly entered the top 10 cryptocurrencies by market capitalization for the first time since 2015 after a vertiginous rise that caused the price of the token to multiply almost tenfold. It all started when prevented irreverent retail traders in the US stock market buy more shares of GameStop and AMC on Thursday.
At the time, the horde of retailers that had joined in on r / Wallstreetbets had apparently trapped established Wall Street short sellers in a huge short squeeze, or Short Squeeze. While retail brokers suspended trading in GME and some other securities, some Redditors were probably still pumped with nervous trading energy and turned their attention to DOGE.
On Thursday, Twitter user “WSB Chairman” asked his nearly 750,000 followers: “Has DOGE ever been for a dollar? There was a storm of activity on social media, and Dogecoin became the first altcoin in history to outperform Bitcoin (BTC) in terms of volume of daily mentions on Twitter.
Commenting on the link between social media activity and Dogecoin price action, Joshua Frank, co-founder and CEO of cryptocurrency research firm The Tie, told Cointelegraph: “Everyone universally agrees that no one is investing in the ‘fundamentals’ of Dogecoin “. He further added:
“As DOGE enjoys substantial support across different social media platforms, its price reacts very strongly to spikes in conversation. We have also noticed that support for Dogecoin comes in waves, there will be periods of days or weeks when the DOGE meme heats up again and a lot of retail customers are starting to put their money behind it. “
The Dogecoin price surge coincided with a surge of new activity in the cryptocurrency space, with exchanges like Binance reporting a flood of new account openings. In fact, several exchanges altcoin withdrawals stopped and the volume was significantly reduced.
Changpeng Zhao, CEO of Binance, also touched on the relationship between social media hype and Dogecoin price action, telling Cointelegraph that DOGE is “probably and measurably the most successful joke ever, with a current market capitalization of over $ 7 billion “. And he added:
“As it was born from a meme it is an attractive target for groups on social networks. Being relatively smaller than other cryptocurrencies, but with a great notoriety, it is probably easier to mobilize a campaign or movement around it with a immediate and significant impact on price. “
This service interruption, typical of Bitcoin price movements, has caused the price of the DOGE token to drop by 50%. However, sentiment on social media remains high, with several posters calling for a price of $ 0.10 as a short-term target.
Dogecoin will need a 2,000% price rally to reach the $ 1 milestone set by the WSB account holder. Additionally, as previously reported by Cointelegraph, Dogecoin’s 24-hour trading volume surpassed the $ 5 billion mark for the first time on Binance, outperforming Bitcoin trading activity on the platform.
Memetic price action for DOGE
The current buzz around Dogecoin isn’t the first social media-driven hype cycle in the history of the popular meme coin. In fact, DOGE’s entire existence is based on memetic engineering and the emerging economy of memes.
In 2020, Tesla CEO Elon Musk tweeted about Dogecoin on two separate occasions, and the price of the token responded positively in both cases. Last year, Musk ranked first in a Twitter poll to decide who should become the CEO of Dogecoin. The Tesla CEO would later refer to himself as the “former CEO of Dogecoin.”
Musk’s impact on cryptocurrency price action is not limited to Dogecoin. Bitcoin entered an upward trajectory after Musk updated his Twitter bio to feature just one word: “Bitcoin.”
As in the case of Dogecoin way back in 2020, Musk flying the Bitcoin flag triggered a massive “Elon candle” for BTC price action. The largest cryptocurrency by market capitalization raised over $ 5,000 in just a few minutes, eclipsing the $ 38,000 mark for the first time since mid-January.
Following Musk’s lead, other notable crypto advocates both within and outside of the industry – including participants in the broader tech and social media space – have also started to fly the Bitcoin flag. Reddit co-founder Alexis Ohanian, a prominent Ethererum supporter, has also joined the trend.
Aside from Musk, a viral campaign on the social media platform TikTok also created significant upward momentum on Dogecoin price action. In fact, DOGE managed to mount the excitement created by viral videos to reach a maximum of two years at that time.
Asset valuation in the age of social media
The GameStop saga once again exposed the efficient market hypothesis argument, which says that stock prices are a reflection of fair market value. In fact, retail traders using publicly available information correctly deduced that the massive purchase of GME shares would put hedge funds short selling in a tight spot.
According to the hypothesis, such a situation – beating the market – can only be achieved by sheer luck.. However, in the modern age of social media, such concepts are increasingly being challenged by a horde of irreverent people who apparently have an ax to grind with the establishment.
For Aaron Khoo, head of listings at cryptocurrency data aggregator CoinMarketCap, the Dogecoin surge is indicative of a much deeper awakening among retail investors, as he told Cointelegraph:
Like GME’s Gamma squeeze, Dogecoin’s rise epitomizes a psychological desire to tease the man – a loose crush of individuals ultimately wanted to make a statement that Wall Street hedge funds ostensibly credentials, they were not in a better position to claim the right to make pronouncements on what a fair valuation of an asset should be. “
At the time of writing, Dogecoin is still glowing green in terms of its 24-hour price action. The previous jump above $ 0.08 constituted an all-time high price for the meme coin, making it one of the few altcoins to regain and exceed its 2018 price records.
It is a common belief that a Dogecoin pump is one of the precursors to an “alt-season”. In fact, given the cyclical nature of Dogecoin’s price action, a reversal of the DOGE / BTC chart often signals periods of significant gains for the altcoin market.
The reason is quite simple, as DOGE’s pumps are purely based on “pumpamentals” – a retail presence spurred by a hype on social media – which often causes the price of Dogecoin to skyrocket.. This retail-driven fear of getting lost often spreads to other altcoins.
However, bullish fatigue in the Bitcoin space is also another ingredient for the alt-season. At the moment, BTC seems to have even more fuel to burn, so the market may have to wait and see. Additionally, traditional alts have to deal with pressure from the decentralized finance space, blue chips that have proven to be a favorite among crypto investors.