In a surprising move, Elon Musk’s media social platform, Twitter, has replaced its 15-year-old logo with that of Dogecoin, causing a stir in the crypto world. The change had an immediate impact on the market, with Dogecoin surging by 33% out of the blue and temporarily decoupling from the rest of the crypto market.
While the move was expected to be part of Musk’s ongoing effort to gain attention, make people laugh and possibly earn some money, the sudden surge in Dogecoin’s price did not go unnoticed by traders and investors. According to Santiment, the surge was accompanied by various top signals that indicated major players taking heavy profit or getting out of the asset entirely.
Source: Santiment
The surge in price also triggered a spike in discussion rates for Dogecoin, with its market capitalization ranking 8th largest among cryptocurrencies. However, as the initial excitement subsided, the price of Dogecoin corrected back -9% from its peak. This correction, along with various indicators, suggests that a local top is forming, and taking profits might be a wise decision.
Looking at the average trading returns, the 30-day MVRV for Dogecoin is sitting at +11%, which is still lower than the danger zone of +20% or more. Thus, there could still be some cushion for prices to rise further, even after Elon-induced price surge.
Santiment’s analysis also divides Dogecoin addresses into four different key sizes: Fish (0-10 DOGE): Blue line. Dolphins (10-10K DOGE): Yellow line. Sharks (10K-10M, DOGE): Red line. Whales (10M or More DOGE): Orange line – to understand the buying behavior of different groups of investors.
The smallest fish addresses bought aggressively at the peak, indicating a price top. Dolphins and sharks did not show any signs of engagement with the rally, while whales seemed to have been showing mild accumulation leading up to Elon’s DOGE logo replacement on Twitter.
This suggests that massive DOGE holders, including people close to Elon Musk and possibly Elon himself, had prior knowledge of the DOGE pump. Once the price spike happened, the red line (whales) showed signs of dumping, indicating profits being taken.
Despite the recent surge in price, Dogecoin’s chart shows “lower highs” being made consistently in the hours past yesterday’s pump. This makes it hard to get too excited about a sudden correlation break, and “higher highs” would be a much more solid indication that a bigger rally will be commencing soon.
In summary, while Dogecoin’s recent surge in price may have been influenced by Elon Musk’s tweet, investors and traders should consider the various signals that suggest a local top may be forming. It remains to be seen whether the cryptocurrency will experience another rally soon, or whether its price will continue to trend downwards.
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This article was republished from azcoinnews.com
