Dogecoin has doubled its value by 10, with a rally that carried crypto to $ 0.74 last week. Most of the time behind the rally is Tesla CEO Elon Musk and his constant mention of cryptocurrency in his social media posts and interviews. Interestingly, after the May 8 Saturday Night Live episode, in which Musk joined and mentioned Dogecoin, DOGE experienced a 42 percent correction.
Dogecoin’s market value was $ 65 billion, while over $ 130 billion worth of transactions were made last week. This prompted market commentators to ask: Are there big whales behind the collapse? Or are futures contracts responsible?
SNL episode that Musk attended increased expectations
The SNL episode, which Musk participated, seems to have set the peak in Dogecoin price. This highly anticipated episode may have triggered the “buy the rumors, sell the news” style price action.
It is not clear why Musk, the second richest person in the world, showed so much interest in DOGE. Some commentators think the Tesla CEO might just be having fun rather than believing that Dogecoin can reform the monetary system.
I see Elon Musk removed BTC from his profile. Around the same time, he tweeted about Doge.
Not too hard to guess what’s going on. Post a funny little joke/distraction after your lawyers ask you to take down the BTC logo while the serious paperwork/filings get done.
— MacroScope (@MacroScope17) February 4, 2021
For whatever reason, with this rally, Dogecoin climbed to fourth place, surpassing cryptocurrencies such as XRP, Cardano (ADA) and Polkadot (DOT) in the list of the largest cryptocurrencies in terms of market capitalization.
Moreover, the number of Dogecoin searches on Google even surpassed Bitcoin searches.
Whales are saving, not selling
The 109 largest addresses in the Dogecoin market hold 67.4 percent of the total supply. The address with the largest amount, on the other hand, was created in February 2019, which is relatively new. On the other hand, following previous transactions, it is seen that it is associated with another address created in July 2018, when Robinhood started trading DOGE.
As seen above, the 14 largest Dogecoin addresses have increased their savings by 4.66 billion DOGE over the past 30 days. In fact, only the ninth largest address sold in the last seven days. Even when this analysis is made to cover the largest 50 addresses, it is seen that the total accumulation has increased by 4.36 billion DOGE.
Therefore, there is no evidence that whales made a substantial sale while Dogecoin was doubling its value by 10.
The futures market is not responsible for the decline
The data also reveal that the futures market is not responsible for the recent price action. If this were the case, a significant amount of volume and liquidation would be seen.
290 percent volume increase was seen in the futures market last week. While it’s far from the $ 54 billion peak volume seen on April 16, it may have played an important role in the Dogecoin rally.
However, high volume may not always have an effect on price. For this reason, liquidations should also be analyzed.
A major surge on April 16 resulted in the liquidation of $ 726 million worth of contracts from both short and long positions. Last week, many long positions were liquidated rather than short positions.
The $ 340 million worth of purchase orders caused by the liquidated short positions is small compared to the daily average futures volume of $ 28 billion.
This is why Dogecoin’s price action appears to be purely individual investor-driven as the top 50 addresses do not operate extraordinarily or there are no major liquidations in the futures market.
The opinions and views expressed herein are those of the author alone and do not reflect the views of Cointelegraph. Every investment involves risk. Do your own research before making a decision.