Dogecoin has broken away from the rest of the market with a rise of 9%. Here’s why, according to history, this could be bad for Bitcoin.
Dogecoin has registered a 9% jump in the past 24 hours
While most of the cryptocurrency market has seen sideways price movements over the past day, Dogecoin has shown itself to be different as its value has witnessed a remarkable rise.
The chart below shows the trend in the price of DOGE over the past month.
The chart shows that with this rally, Dogecoin price has claimed the $0.134 mark and surpassed last month’s high. The memecoin is now close to the July top, so if this run continues, the memecoin could potentially have a go as well.
In terms of weekly returns, the latest jump has meant that DOGE is now up over 24%, making it the best performer among the top 50 coins by market cap.
Dogecoin isn’t the only memecoin on the rise; The asset’s cousin, Shiba Inu (SHIB), has also had bullish momentum over the past day, although its 5% jump is less impressive than DOGE’s.
This latest focus on meme coins may not be the best sign for the cryptocurrency sector as a whole.
The market reached its peak when Memecoins gained attention last time
This is evident from data from the analysis company Santimentmemecoins’ social dominance rose above the $68,000 level during Bitcoin’s recent summit. The “Social Dominance” here refers to an indicator that tracks the percentage of discussions regarding the top 100 coins on social media that a given coin or group of assets currently occupies.
Here’s a graph showing how the social dominance of the top 6 layer 1 assets compared to that of the top 6 meme coins recently:
As shown in the chart above, the memecoins’ social dominance had previously skyrocketed once Bitcoin and others had recovered, indicating that investors have started paying attention to these speculative assets.
However, this interest in the meme coins coincided with the market top. “Normally, markets correct when focus shifts from layer 1 to more speculative assets due to greed,” the analytics firm explains.
With Dogecoin and Shiba Inu pulling away from the pack in the past day, it appears that investor greed is still high, potentially leading to more bearish action for Bitcoin and other top assets.
The chart shows that the market tends to bottom out when attention has shifted back to the layer 1 networks. So this may have to happen again if the sector-wide run is to continue.
