In July 2020, Musk last tweeted about Dogecoin, when he said he expected a “Dogecoin standard future.” DOGE rallied 14 percent at the time.
When Musk tweets, the explanation behind Dogecoin’s upsurge is fairly simple. As cryptocurrency researcher Hasu states, “prices in this space are fueled by attention.” Thus, when there is a significant increase in interest, a cryptocurrency with a low market cap may increase rapidly.
On December 20, the price of Dogecoin (DOGE) rallied by about 25 percent as Tesla CEO Elon Musk once again drew attention to the cryptocurrency motivated by the meme. Musk tweeted “One word: Doge”, which created a frenzy on Twitter. Dogecoin began to trend, especially as Musk changed his bio to “Former CEO of Dogecoin.”
Dogecoin has a market cap of about $549 million, according to statistics from CoinMarketCap. DOGE’s value is considerably smaller relative to big cryptocurrencies, such as Bitcoin, Ether and top decentralized finance (DeFi) tokens. In addition, because DOGE is only the world’s 44th largest cryptocurrency, its volume and liquidity are lower than the top cryptocurrencies.
Technical analysts and traders point out that in the past, DOGE upsurge contributed to the initiation of altcoin cycles. A pseudonymous trader referred to as “Crypto Capo” said: “Every altseason starts with $DOGE pumping.”
Since Bitcoin faces a huge resistance at $25,000 based on exchange orderbook data, the possibility of an altcoin season appearing remains high. The trader also noticed that first, Bitcoin would actually hit $25,000, drop to $21,000 to regain support, and make its run to $30,000. The trader replied: “Potential roadmap for $BTC -$25k, then $21k-22k, then $30k Dips are for buying.”
If a similar situation happens, the main beneficiary is potentially Altcoin. Traders will look for higher-risk plays in order to compensate for the decrease in the Bitcoin market.