Last Thursday, I mentioned that Dogecoin (DOGE)’s 25% rally was absolute peanuts compared to the 1,200% moonshot we saw in May 2021.
Well, the rally has steamed ahead and DOGE’s market capitalisation is more than double what it was a week ago.
At over US$16.2bn, the Shiba Inu-themed meme coin now has a greater market value than top-tier network tokens Cardano (ADA), Solana (SOL) and Polygon (MATIC).
Elation among Elon Musk (a Dogecoin uber-fan) cheerleaders across Twitter is at a fever pitch, and for good reason; his final takeover of the social media platform caused this latest rally, just like his Saturday Night Live appearance caused the last one.
Twitter Blue #Dogecoin Acceptance!— Matt Wallace (@MattWallace888) October 31, 2022
Speculation has it that Musk intends to integrate DOGE into Twitter somehow, whether by making it a payment option for Premium services, or some other form of blockchain-based integration.
There is precedent to back this speculation up- earlier this year, he made DOGE an official payment option in the Tesla (NASDAQ:TSLA) merchandise store.
As of today, Musk has yet to comment on the top meme dog, but it is more than likely that Twitter and the blockchain have a future together.
Binance, the world's largest crypto exchange that invested $500mln million into Musk's Twitter takeover, is putting together a team to work on how blockchain and crypto could become integrated with the social media platform, a company spokesperson said on Friday.
Speculation will no doubt continue, but how long can hype sustain this rally?
Dogecoin is without a doubt, extremely overbought right now.
The relative strength index – a technical indicator that assesses an asset’s overbought or oversold position – is the second highest it has ever been (just below last May 2021’s SNL rally).
DOGE’s relative strength index (purple) shows the meme coin’s highly overbought position – Source: currency.com
Signs of retracement can already be observed, with DOGE’s price around 4% down day on day. A deeper correction is almost a given, the question is by how much?
When DOGE hit an all-time high (ATH) on May 8, 2021, the coin fell back around 50% in the following two weeks.
In more bullish terms, DOGE remained 537% up compared to its pre-rally exchange price.
But the stakes are different today. Last year, the crypto markets were entering their best season of all time; this year the crypto winter is in danger of turning into an ice age.
Dogecoin’s red-hot rally could soon face some chilly headwinds, as the euphoria subsides and speculators cash out their short-term winnings.
Trading volumes have already collapsed over 60% in the past two days alone.
But who knows? Maybe tomorrow Dogecoin will become the official currency of Twitter and the fabled US$1 price point finally becomes a reality.
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