- The dog-themed token reversed all the gains it made during the Musk-induced rally.
- DOGE’s social media mentions declined sharply following the event.
The world’s largest memecoin, Dogecoin (DOGE), has fallen sharply since the actions of its most influential supporter, Elon Musk, sent its price up significantly a week ago.
Recall that the “original memecoin” rose by more than 10% on January 21st as social platform
History shows that Dogecoin consistently responds positively to payments-related developments from the Elon Musk-owned company.
But as is history, as the hype died down, DOGE reverted. The dog-themed token has since plunged 11%, effectively reversing all the gains it made during the Musk-induced rally.
Source: CoinMarketCap
DOGE’S ROLLER COASTER RIDE
As expected, whale investors who showed tremendous interest in DOGE on the day of the Musk-induced rally eventually gave up.
AMBCrypto’s analysis of Santiment data shows that large transactions of more than 100,000 have fallen 60% since January 21. The trajectory closely matched the price movement of DOGE.
Source: Santiment
Moreover, DOGE’s mentions on popular cryptocurrency-focused social media channels plummeted after the double-digit rally.
The weighted index also entered negative territory, indicating a decline in investor confidence.
Source: Santiment
Are you overly reliant on Elon Musk?
These indicators have repeated DOGE’s story throughout recent history.
Social media posts linked to Elon Musk and news related to payments will excite the community. But in the end, nothing important will come out about memecoin.
This over-reliance on technical Czars has not only limited DOGE’s potential, but has also made it a highly volatile asset. In contrast, other memecoins such as Shiba Inu (SHIB) and Floki (FLOKI) have diversified into real-world use cases.
A peek into DOGE’s futures market
Meanwhile, the 10th largest cryptocurrency by market capitalization was witnessing better demand in the derivatives market compared to earlier this month.
Realistic or not, DOGE’s BTC market cap is as follows:
As of this writing, open interest (OI) in DOGE futures was $361.9 million, according to AMBCrypto’s analysis of Coinglass data. It did not exceed $350 million in the period from January 4 to January 20.
Source: Coinglass
Moreover, for most of last week, DOGE’s shorts have exceeded its longs, as can be seen by looking at the bid/ask ratio chart.
Source: Coinglass