Groups of speculators use the charm of the meme to attract unsuspecting buyers. The price of DOGE rises from time to time due to artificial lawsuits and unlawful actions.
CoinMetrics said in a report regarding Dogecoin (DOGE) that the currency might be the most user-driven cryptocurrency on social media. At first glance, CoinMetrics describes DOGE as the asset of the blockchain ecosystem that most closely resembles the case of GameStop, whose shares rose, encouraged by an army of retail investors in the Reddit WallStreetBets forum. However, when analyzed in-depth, it is crystal clear that they are not similar.
For CoinMetrics analysts, DOGE is the best example of “a potent combination of hype fueled by social media and the endorsement of millionaires.” Its price rises thanks to groups on Twitter, TikTok, Discord, Telegram, and Reddit. The cryptocurrency’s value rose more than 500% when it climbed to $ 0.085 on January 29.
There are various factors behind the so-called meme coin price boom, but all stemmed from the frenzy started by Reddit users grouped on WallStreetBets. CoinMetrics says that, despite the massive increase in the price of the cryptocurrency, the active addresses at that time did not even reach a new all-time high.
This phenomenon suggests that most new buyers kept their funds on centralized platforms like Robinhood rather than buying DOGE and supporting the currency at their addresses.
Social Media is Skyrocketing Cryptocurrency Prices
The number of active Dogecoin addresses reached its all-time high in July 2020, which coincides with the spread of a viral TikTok challenge that skyrocketed the cryptocurrency price. At that time, the social network’s marketing strategy bore a resemblance to an unethical practice like “Pump and Dump.”
It is a market manipulation scheme by an investor or group of them who try to skyrocket the price of an asset they own and then sell it massively. They achieve this through recommendations that have roots in false, misleading, or highly exaggerated statements.
These pumping-up cryptocurrency prices create artificial demands and illegitimate actions, which differs from the organic activities that manage bitcoin price. CoinMetrics points out that these movements distinguish themselves by raising a particular asset price for brief periods, which occur just after promoting a rumor or false news.
Through social media, an artificial growth operation of the Dogecoin price is happening. Unlike the more real growth of bitcoin, the market makes the price grow, and its number of transactions and active addresses suffer a linear growth trend.
CoinMetrics also provides up-to-date data on active bitcoin addresses, which averaged over 1.1 million last week, hovering around all-time highs. For its part, the Ethereum network now averages more than 1.2 million transactions per day, which is around the previous all-time highs established during the January 2018 peak. These data reveal that growth on these networks is organic.
By: Jenson Nuñez
