The crypto space has seen dozens of projects lose close to 90% of their value. Some coins have not only maintained a stable price but have even flourished in this bear market. The most surprising of these coins is Dogecoin.
During August and September, Dogecoin rose by almost 160% while the majority of Altcoins lost more than 10% of their value at the same time.
This is especially surprising when we keep in mind the fact that Dogecoin is considered a ‘parody’ cryptocurrency to most; a coin that was developed as a joke to see if it would get traction during the crypto bull market of 2013 (and it certainly did).
Dogecoin stated utility is for buying goods and services (just like bitcoin). However, it also serves as a currency for tipping content creators on the Internet.
Although dozens of other cryptocurrencies have the same utility, Dogecoin seems to have succeeded in forming a loyal and supportive community of users dedicated to holding, and most importantly, spending the coin on a regular basis.
In fact, as of June 2018, Dogecoin was processing 300% more transactions than Bitcoin Cash. This is even more impressive when we consider the fact that Bitcoin Cash’s whole purpose for existing was to become a more ‘transaction friendly’ alternative to Bitcoin.
Possible reasons for the recent Doge price spike
It’s always hard to determine precisely what event kicks off a price rally for any particular coin. However, for Dogecoin, it seems that the recent listing by the popular stock and crypto trading app Robinhood may have got the crypto investors excited.
Robinhood announced in mid-June, which led to a solid price spike, followed by a much larger one a month later. Robinhood is most popular amongst millennial investors, which made Dogecoin a welcome fit to their roster of cryptocurrencies.
According to Michael Chang, a Managing Director at the blockchain-focused consultancy Wachsman, one of the most significant factors that had led to Dogecoin’s success is that it’s easier to wrap your head around than more ambitious alternatives:
“As Robinhood is looking to establish itself as a cost-effective and reliable alternative for crypto exchanges, much like it did with traditional stock exchanges, it provides an entrance into the crypto landscape for the average investor,” says Chang.
“Although Dogecoin has just two GitHub commits, it is one of the most highly transacted cryptos in the market today.”
Dogecoin as an indicator for Alt season
Historically, whenever Dogecoin has done very well, it’s usually been a sign that we’ve reached the peak of Alt Season, as almost all other altcoins with real value have already pumped, and so traders are looking to go down to list to see if the joke coins will also pump. This means the market is closely approaching the end of a bull cycle. However, a price rally in Dogecoin has occasionally triggered the opposite reaction in the markets.
According to the cryptocurrencyfacts: “A few sizable Doge rallies have coincided with the end of major crypto market bull cycles; the Feb 2014 rally and Jan 2018 rally are two clear examples of this. However, in between Doge has sometimes acted as an indicator of bearish trends turning bullish. For example, the Doge rallies that started in Oct of 2015 March of 2017 were foreshadowing good things to come. So, in other words, if you see Doge rally after a long bear market, it could be a bullish sign, but historically, if you see Doge rally under any other conditions, watch out. The rest of the page will be about Doge as a Bearish indicator.”