As we all know, Elon Musk isn’t just a billionaire and founder of the most innovative companies these days, he is one of the most eccentric individuals in the world. Numerous times we have witnessed how his simple publications on social media have changed the prices of different assets. Since the crypto market is the most volatile thing ever witnessed in the world of finances, it’s no wonder that several of Musk’s tweets have caused extreme fluctuations in digital coins.
Since Musk is now not just an active user but an owner of Twitter, he has much more influence on the platform. On April 3 we could see how this influence has grown. That day, Elon changed the logo of Twitter to the logo of his favorite cryptocurrency Dogecoin, which contributed to the extreme surge from $0.076 to $0.116 in just several hours! Consider the current DOGE price before making an investment.
Actually, the 56% spike in the DOGE price that happened at the beginning of April isn’t a big surprise for those who understand how this asset works. But why is it so and is it possible to predict further surges and take advantage of them? Let’s find this out!
Reasons for such extreme DOGE volatility
The volatility of Dogecoin’s price can be attributed to several factors, as outlined in the following bullet list:
- Social Media Influence: Dogecoin’s price is often influenced by social media activity, particularly on platforms like Reddit and Twitter. High-profile endorsements or mentions of Dogecoin by influential individuals or communities can create a sudden surge in demand and drive up prices, while negative sentiment or news can result in rapid price drops.
- Market Speculation: Dogecoin is often subject to speculative trading, with many investors buying and selling based on short-term price movements rather than long-term fundamentals. This speculative trading can result in rapid price fluctuations as traders react to market sentiment, news, and other short-term factors.
- Lack of Fundamental Value: Unlike traditional assets, Dogecoin does not have inherent fundamental value or underlying assets. It was initially created as a meme-based cryptocurrency with no specific use case or utility. This lack of fundamental value can make Dogecoin’s price more susceptible to speculative trading and rapid price changes.
- Low Market Liquidity: Dogecoin’s market is relatively small compared to more established cryptocurrencies like Bitcoin and Ethereum. As a result, even a relatively small amount of buying or selling activity can have a significant impact on its price. Low market liquidity can amplify price volatility and make Dogecoin more susceptible to sudden price swings.
- Lack of Regulation: The cryptocurrency market, including Dogecoin, is largely unregulated compared to traditional financial markets. This lack of regulation can result in market manipulation, insider trading, and other unethical practices that can contribute to price volatility.
- High Dependency on Sentiment and Hype: Dogecoin’s price is heavily influenced by sentiment and hype, with sudden spikes in demand often driven by social media buzz or celebrity endorsements. However, this hype-driven demand can be short-lived and result in rapid price declines once the hype dies down, contributing to the volatility of Dogecoin’s price.
- Lack of Real-world Adoption: While Dogecoin has gained popularity as a meme-based cryptocurrency, it has limited real-world adoption and utility compared to more established cryptocurrencies. The lack of widespread acceptance and usage of Dogecoin in real-world transactions can limit its long-term value and make its price more volatile.
It’s important to note that the cryptocurrency market, including Dogecoin, is highly speculative and can be unpredictable. Investors should carefully consider the risks and volatility associated with Dogecoin and other cryptocurrencies before making investment decisions.
What about the future?
The above-listed factors make it impossible to make either short-term or long-term predictions on the price of the cryptocurrency. The truth is that one event, like Elon’s tweet, can change everything in a second, and the lack of the product’s liquidity will only facilitate the shift. All we can rely on is the predictions based on the analyses of technical features and historical performance.
After conducting a thorough analysis of historical price data, it is projected that Dogecoin’s price in 2024 may exhibit significant volatility. The minimum anticipated price for Dogecoin could hover around $0.159984, while the maximum expected price may surge to approximately $0.189981. On average, the projected trading price for Dogecoin in 2024 might settle around $0.169983, reflecting the dynamic nature of the cryptocurrency market.
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