The price of Dogecoin (DOGE) rose by almost 25% on 20 December as Tesla CEO Elon Musk once again drew attention to the meme-inspired cryptocurrency.
His enthusiasm for Elon Musk and Dogcoin is a long-running meme. Every once in a while, Musk likes to tweet about bitcoin (BTC) and the crypto market. When he does, the market reacts quite aggressively.
Musk last tweeted about Dogcoin in July 2020, when he stated that he supports the “DogCoin Standard Future”. At the time, DOGE rallied 14%.
The reason for Musk’s tweet being very simple is DogCoin’s problem. As the cryptocurrency researcher Hasu telling, “Prices are taken care of in this space.” Therefore, when there is a significant increase in attention, low market cap cryptocurrency can grow rapidly.
Dogcoin is trending on Twitter
On December 20, Musk began tweeting about bitcoin, posting several tweets about the major cryptocurrency.
Bitcoin is my safe word
– Elon Musk (@elonmusk) 20 December 2020
In the midst of this, Musk tweeted “one word: Doge”, causing a frenzy on Twitter. Dogcoin began to trend on the stage, especially as Musk changed his bio to “former CEO of Dogecoin”.
According to data from CoinMarketCap, Dogecoin has a market capitalization of about $ 549 million. Compared to major cryptocurrencies such as Bitcoin, Ether (ETH) and Top Decentralized Finance (Defy) tokens, the valuation of DOGE is quite low.
Furthermore, because DOGE is only the 44th largest cryptocurrency in the world, its volume and liquidity is lower than that of the top cryptocurrency.
For example, when an influential person like Musk talks about DOGE, cryptocurrency often increases because trading activity suddenly increases.
In November, a similar trend was observed in other major altcoins. For example, as Cointelegraph pointed out, XRP increased massively as bitcoin began to rally towards $ 19,000. On Coinbase, it surpassed $ 0.90, hitting around $ 0.75 on other major exchanges.
What does the boom of DOGE indicate?
Technical analysts and traders have pointed out that the fluctuations of DOGE initiated altcoin cycles in the past. A pseudo-merchant known as “crypto capo” said:
“Every alstance starts with a $ dog pump.”
An Altcoin season is more likely to emerge as Bitcoin faces a major resistance at $ 25,000 based on exchange orderbook data.
The merchant also stated that bitcoin would likely collide with $ 25,000, drop to $ 21,000 to reclaim support, and make its run with $ 30,000. The merchant said:
“There are potential roadmaps for $ BTC – $ 25k, then $ 21k-22k, then $ 30k to buy dips.”
If such a scenario occurs, the largest beneficiary will likely be altcoins. Traders will look for high-risk plays to reduce volatility in the Bitcoin market.
The combination of these factors suggests that DOGE’s rally may mark the beginning of a new altcoin cycle in the future.