Elon Musk is tweeting about Dogecoin again, and DOGE rallied 25% on Binance.
The price of Dogecoin (DOGE) was up about 25% on December 20, until Tesla CEO Elon Musk once again drew attention to the meme-inspired cryptocurrency. Elon Musk and his enthusiasm for Dogecoin is a long-standing meme. Musk always likes to tweet about Bitcoin (BTC) and the cryptocurrency market. When it does, the market reacts quite aggressively.
Musk last tweeted about Dogecoin in July 2020, when he said that he envisions a “standard future for Dogecoin.” At that time, DOGE was up 14%.
The reason behind the Dogecoin surges when Musk’s tweets are pretty simple. As cryptocurrency researcher Hasu explains, “Prices in this space are driven by attention.” Therefore, when there is a significant increase in attention, a small market cap cryptocurrency can rise rapidly.
Dogecoin becomes trending on Twitter
On December 20, Musk began tweeting about Bitcoin, posting a lot of tweets about the dominant cryptocurrency. In the midst of it, Musk tweeted “One word: Doge,” which caused hysteria on Twitter. Dogecoin started trending on the platform, especially when Musk changed his bio to “Former Dogecoin CEO.”
According to data from CoinMarketCap, Dogecoin possesses a market capitalization of around $ 549 million. In comparison to bigger cryptocurrencies such as Bitcoin, Ether (ETH), and major decentralized financial tokens (DeFi), DOGE’s valuation is substantially lower.
According to Coinmarketcap, the market capitalization of Bitcoin is $ 441,262,403,855. Also, because DOGE is only the 44th largest cryptocurrency in the world, its volume and liquidity are lower than the major cryptocurrencies. Hence, when an influential figure like Musk talks about DOGE, the cryptocurrency often goes up in price as trading activity spikes suddenly.
In November, other large altcoins showed a similar trend. For example, XRP skyrocketed massively as Bitcoin started to climb to a peak of $ 19,000. On Coinbase, it topped $ 0.90, while on other major exchanges it hit $ 0.75.
What does the increase in DOGE indicate?
Technical analysts and traders are claiming that the rise of DOGE paved the way to the start of altcoin cycles in the past. A trader whose pseudonym is known as “Crypto Capo” said:
“Every altcoin season begins with the pumping of $ DOGE.”The likelihood of an altcoin season coming in remains high as Bitcoin faces significant resistance at $ 25,000 based on exchange order book data.
The trader also stated that Bitcoin will likely hit $ 25,000 first, drop to $ 21,000 to regain support and make its run towards $ 30,000. The trader said: “Possible roadmap for $ BTC: $ 25,000, then $ 21,000-22,000, then $ 30,000 and the dips are to buy.”
By: Jenson Nuñez.
