Dogecoin Price Records Significant Gains
Dogecoin, DOGE – a meme cryptocurrency that has been ultra-popular since its minting – is back in the news after it jumped 24% over the last week in price. Despite recording these huge gains,t Dogecoin remains in bear market territory.
Moreover, the DOGE/BTC ratio is still in a downtrend since May 2021. This ratio represents how valuable Dogecoin is when expressed in Bitcoin rather than US dollars.
With the short-term gain the meme token has recorded, most analysts argue that it’s still early to be optimistic about a strong rally similar to the coin one experienced at the beginning of 2021. Notably, the broader crypto market is still bullish.
However, the outlook on Dogecoin remains highly unclear from a technical point of view, mainly when put into perspective against Bitcoin.
Dogecoin’s 2021 Bull Run
Early in 2021, Dogecoin consistently outperformed Bitcoin, with the DOGE/BTC ratio up nearly 1,000% in the first four months of that year. The bullish run culminated in the wider market crash in May 2021.
Bitcoin fell from a high of $60,000 to as low as $30,000, and Dogecoin was among the altcoins that fell in value like BTC’s price. Despite making a similar rally recently, Dogecoin is still far from recapturing the strong bullish run in 2021.
Since many analysts consider Dogecoin to be a highly speculative asset (an asset with little intrinsic value), they have sounded a note of warning about the coin’s latest price spikes. They argue that price jumps like this 24% increase are red flags since the market might be preparing for yet another period of volatility, particularly when retail investor traders invest based on the hype.
Meanwhile, the DOGE/BTC pair is bouncing off a key horizontal support that has been in place since early February. If the memecoin breaks above the long-term trendline linking its May 2021 and November 2022 highs, it could suggest that the bear market has come to an end.
More importantly, it opens the door for further gains, reminiscent of the late 2020 to early 2021 frenzy.
Dogecoin Whales Increase Holdings
Besides the DOGE price rise, there has also been increased whale activity in the Dogecoin ecosystem. According to on-chain data, net inflows of this cryptocurrency into whale wallets (addresses holding at least 0.1% of the total circulating supply) have soared by 899% in the last 24 hours.
The difference between DOGE bought and sold also rose to 527.3 million DOGE or about $63 million. Earlier in the week, when the price of DOGE went up, whales sold off some of their coins.
But at the time of writing, the number of DOGE buyers is far higher than the sellers, indicating a shift in interest sentiment among big holders. The future performance of Dogecoin could depend on the broader market trends, especially Bitcoin.
Musk’s Initiative Lifts DOGE’s Price
Meanwhile, X owner Elon Musk has promised that a Donald Trump win at the next US presidential election would lead to the creation of a Department of Government Efficiency, D.O.G.E. The objective of this government department is to reduce government spending and simplify bureaucracy to make better use of every hard-working taxpayer’s money.
Trump has shown interest in Musk’s idea and hinted that Musk could head this commission. It’s worth noting that Musk has invested in excess of $75 million into political action committees over the past three months to position himself as one of the key supporters of Trump’s campaign.
Following the announcement, DOGE’s price surged 10%, trading around the $0.13 range. According to Coinglass data, Open Interest for DOGE futures climbed 18.09%, reaching $926.76 million.
In addition, the volume of the coin’s traded options surged by 616.31%. At the time of writing, the number of social media conversations about Dogecoin is at a one-year high.
Musk’s latest foray into politics and his D.O.G.E. plan could bring more interest in Dogecoin. As is often the case, Musk’s DOGE mentions often push its price up, and the latest mention has noted a similar effect.
