Dogecoin’s hype may be over. This is the hypothesis that Santiment makes in light of data based on:
As a preface, it is worth mentioning that Dogecoin has been on a roll this past month, on the wave of the pump attributed to WallstreetBets and Elon Musk’s tweets.
On January 28th, Dogecoin was worth $0.007. The next day, January 29th, it was worth a whopping $0.07. And while one zero less may not seem to make a difference, it is worth bearing in mind that it was a 10-fold increase in price. Amidst the ups and downs, Dogecoin is currently trading at $0.05.
In the days of late January, volumes had also literally exploded, marking trades worth $35 billion (Coinmarketcap data).
However, Santiment notes that yesterday, after Elon Musk’s latest tweet about whales, Dogecoin social volumes soared. However, these are far from the peaks of January 29th and 30th. Indeed, Santiment notes that the social volume on January 30th, in correspondence with the price peak, was lower than on the previous day. On the contrary, the price peak was reached in the following weeks, with social volumes now in sharp decline.
Santiment notes that trading volumes also followed the trend in social volumes.
Therefore, he writes:
The conclusion is that:
Dogecoin has become an object of speculation. Its origin is actually humorous: it was created in 2014 as a satirical version of Bitcoin, and its logo is a dog, a Shiba Inu meme to be precise. Its original purpose is tipping, a reward system for content creators on Reddit and Twitter.
Currently, however, its popularity may be its own demise. Indeed, something that even Elon Musk pointed out in his tweet, there are far too many Dogecoin concentrated in the hands of a few ‘whales’. Concentration is a problem, not least because it becomes a great way of manipulating its value and not making it decentralized.