Most recently, DOGE made a 10x profit as it rose to $ 0.74 last week. The outbreak was fueled mainly by Tesla CEO Elon Musk and his constant mentions of the token on social networks and interviews. When Musk debuted on Saturday Night Live on May 8, the Dogecoin price surprisingly corrected 42%, despite Musk, his mother, and SNL actor mentioning DOGE in various skits.
This event led to something unusual as DOGE traded over $ 130 billion in the past week while its market cap is at $ 65 billion. This begs the question of whether the largest whales were involved or whether futures contracts played a major role in the crash.
Musk’s SNL corporate identity raised expectations
Regardless of the motives of the second richest person in the world, Musk’s Saturday Night Live performance appeared to have marked a price spike. Most likely the event was eagerly anticipated, leading to the typical “buy rumors, sell news” price action.
It’s not clear why the billionaire was so interested in DOGE. Some say this trolling reflects more of a personal hobby than a core belief that Dogecoin can reform the entire 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 fun little joke / distraction after your lawyers ask you to remove the BTC logo while the serious paperwork / filings are done.
We will see.
– MacroScope (@ MacroScope17) February 4, 2021
Whatever the case, the Dogecoin rally brought the meme token to the fourth largest cryptocurrency by market capitalization, outperforming household names like XRP, Cardano (ADA), and Polkadot (DOT).
Additionally, in their search for the meme coin, Google managed to outperform market leader Bitcoin (BTC), an outright victory for its fan base including Mark Cuban, owner of the Dallas Mavericks NBA team.
Whales accumulate and do not deflate
Dogecoin is highly concentrated as the top 109 addresses hold 67.4% of the supply. The largest owner is relatively new and was founded in February 2019. However, tracing previous transactions leads to a different address formed in July 2018, which coincides with Robinhood’s DOGE trading launch.
As shown above, the top 14 addresses added a net DOGE of 4.66 billion in the last 30 days. In fact, only the ninth largest addresses have sold coins in the past seven days. Even if you extend the analysis to the top 50 addresses, there was a net addition of 4.36 billion DOGE.
This address, currently ranked number 21, reduced its position by 3.43 billion coins. All top 20 addresses from three weeks ago now remain in the top 75 ranking as owners.
Hence, there is absolutely no evidence that whales massively reduced their positions when Dogecoin made a 10x profit.
The futures markets are not to blame either
Data also suggests that futures markets did not play a significant role in the recent price action. If that had been the case, there would have been significant volumes and liquidations.
In terms of volume, an increase of 290% was recorded compared to the previous week. While these derivatives markets were far from a high of $ 54 billion on April 16, they certainly could have played a role in the incredible rally in Dogecoins.
However, large volume does not necessarily result in a price impact, let alone a 100% weekly profit. Therefore, one should also analyze liquidations, the orders that are forcibly executed by derivative exchanges in order to close positions whose margin has eroded.
A brutal price volatility on April 16 resulted in liquidating both long and short positions of $ 726 million, as shown above. More longs than shorts were liquidated in the past week, indicating that the upside did not catch sellers off guard.
The $ 340 million buy orders caused by the forced liquidations of short sellers last week seem small given the average daily futures volume of $ 28 billion.
Hence, this movement appears to be entirely retail-focused as there is no evidence that the top 50 names have had any unusual activity, nor have there been any large liquidation orders in the futures markets.
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Dogecoin (DOGE) has been in the spotlight since early 2021 as its growing community of retail and business class supporters organized a coordinated push to bring the popular meme coin to the $ 1 level.