Although Dogecoin futures volume tripled, the recent 42% price dump appears to be entirely retail-driven
Dogecoin price has increased 10 times to $ 0.74 in the past week. This breakout momentum was largely driven by Tesla CEO Elon Musk, with his frequent mentions of DOGE on social media and interviews. Surprisingly, when Musk showed up and mentioned DOGE (in negative terms) on Saturday Night Live on May 8, Dogecoin’s price corrected 42%.
This event led to something quite unusual as DOGE has been trading over $ 130 billion in the past week, while the market cap has hovered at $ 65 billion. This raises the question of whether the whales are in, or will futures play a role in this correction.
DOGE/USD 4-hour chart | Source: TradingView
Elon Musk’s SNL show appearance raises expectations for Dogecoin price
Regardless of the motives of the world’s second-richest person, the appearances of Saturday Night Live and Elon Musk appear to have marked a price peak. Chances are, this event has been highly anticipated, thus causing the typical “buy the rumor, sell the news” price action.
It is not clear why this billionaire is interested in DOGE so. Some argue that Musk’s actions reflect a personal preference rather than a core belief that Dogecoin can reform the entire monetary system.
Analyst MacroScope back in February this year mentioned the story between Musk and DOGE. In it, he said that Musk was bored with Bitcoin and was interested in DOGE. And all of these stories are for joke purposes only.
I see Elon Musk removed BTC from his profile. Around the same time, he tweeted about Doge.
Not too hard to guess what’s going on. Post a funny little joke/distraction after your lawyers ask you to take down the BTC logo while the serious paperwork/filings get done.
We’ll see.
— MacroScope (@MacroScope17) February 4, 2021
Either way, Dogecoin’s bullish momentum pushed the meme token to fourth place on the CoinMarketCap chart, surpassing well-known names like XRP, Cardano (ADA), and Polkadot (DOT).
Furthermore, the number of Dogecoin meme searches on Google has surpassed the leader of Bitcoin (BTC). This must be an absolute victory for DOGE fans, including Mark Cuban – the owner of the Dallas Mavericks NBA team.
Whales are accumulating, not dumping; the futures market is also not the biggest driver
Dogecoin currently appears to be in a highly centralized process, as the top 109 addresses are holding 67.4% of the total token supply. Of which, the holder of the largest number of tokens is relatively new, which appeared in February 2019. However, it was also found that an account created in July 2018 also holds a fair amount of DOGE. Coincidentally, this was also the moment when Robinhood’s DOGE transaction was launched.
Top 14 Dogecoin Sites | Source: BitInfoCharts
The top 14 locations have earned 4.66 billion DOGE in net over the past 30 days. In fact, only the ninth-largest addresses have sold the money in the past seven days. Even expanding the analytics to the top 50 sites, there was an additional 4.36 billion net DOGE. Currently ranked 21st, the address is down 3.43 billion coins. All of the top 20 addresses from three weeks ago still hold positions in the top 75 rankings.
Hence, there is absolutely no evidence that whales are selling off DOGE as Dogecoin price is up tenfold.
The data also shows that the futures market did not play a major role in DOGE’s most recent price action. If so, there will certainly be considerable volume and liquidation.
Dogecoin aggregate futures volumes | Source: Coinalyze
From a volume perspective, the DOGE volume was up 290% from the previous week. Although away from the peak of $ 54 billion on April 16, these derivatives markets can certainly play a role in the Dogecoins’ staggering rally. However, large volumes do not necessarily have a price impact, let alone a 100% weekly increase. Hence, one should also analyze liquidity.
Dogecoin aggregate futures liquidations | Source: Coinalyze
A sharp fluctuation in price on April 16 caused $ 726 million long and short orders to be liquidated. In the past week, the number of long has been liquidated more than short. This shows that the uptrend is not at all distracting sellers. The $ 340 million worth of short positions forced to liquidate over the past week looks small compared to the average daily futures trading volume of $ 28 billion.
As a result, DOGE’s bullish momentum seems to be entirely coming from retail investors as there is no sign that the top 50 addresses have unusual activity, nor are there any major liquidation orders in the market. period.
Since the beginning of 2021, Dogecoin has been in the spotlight as its growing community of enterprise and retail backers have organized a concerted effort to push Dogecoin price up to $ 1.
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