After a week of speculative mania, the dogecoin dump has finally settled in. Traders are now getting the taste of a downward price trend.
Social sentiment and crowd mania pumped the value of dogecoin. The currency rose to popularity last week after 80% increase in price within a few hours. It secured a spot in the top 10 crypto assets by market cap for the first time since 2015.
DOGE was started as a joke in 2013. The meme currency went to the sky after it literally became the talk of the town. DOGE had record-breaking tweet volume within 24 hours on Jan 28th.
The retreat set in with a 40% decrease in value on Friday. The biggest plunge on Jan 31st took the price to 0.02. It is slightly up from that now. At the time of this writing, the price is hanging around 0.03 USD.
Reasons for Price Appreciation:
Crypto market is notorious for being momentum-based. The investors in the cryptocurrency industry are far less in number as compared to the forex market investors. Hence the action of a few can bring huge changes in the price of a currency.
Dogecoin pump was a result of group thinking approach. Elon Musk‘s meme and some famous social accounts’ discussion on the price of DOGE propelled the currency into an upward trend.
Resentment for establishment in the trading circle was another source of growing DOGE buy-ins. The trading brokers like Robinhood halted the purchase orders of certain assets after the hedge funds suffered from the price surge. The case of GameStop is in front of us all. Many analysts saw it as a hypocritical move designed to help and protect big investors. So, the small investors took revenge by taking a meme coin to multi-billion dollar value.
The investment in dogecoin was pretty much of a gamble. Multiple exchanges reported withdrawal issues. Inevitably, traders started dumping their DOGE holdings bringing the price down overnight.
The dogecoin did what most of the crypto assets do. However, this episode made traders realize one more time that it is better to invest in fundamentally strong assets. The #DogeToADollar on Twitter has been cast out for now.