Dogecoin has broken away from the rest of the market with a 9% surge. Here’s why this could be bad for Bitcoin, according to history.
Dogecoin Has Registered A 9% Jump During Last 24 Hours
While most of the cryptocurrency market has seen sideways price action during the past day, Dogecoin has shown to be different as its value has witnessed a notable increase.
The below chart shows the trend in DOGE’s price over the past month.
From the graph, it’s visible that the Dogecoin price has claimed the $0.134 mark with this rally and has surpassed the high from last month. The memecoin is now close to the July top, so if this run continues, the memecoin can potentially have a go at it as well.
In terms of the weekly returns, the latest jump has meant that DOGE is now up more than 24%, which has made it the best performer among the top 50 coins by market cap.
Dogecoin isn’t the only memecoin that has been rallying; the asset’s cousin Shiba Inu (SHIB) has also enjoyed bullish momentum during the past day, although its jump of 5% 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.
Market Topped Out The Last Time Memecoins Got The Attention
According to data from the analytics firm Santiment, the Social Dominance of the memecoins had spiked during the recent Bitcoin top above the $68,000 level. The “Social Dominance” here refers to an indicator that keeps track of the percentage of the discussions related to the top 100 coins on social media that a given coin or group of assets is occupying right now.
Here is a chart that shows how the Social Dominance of the top 6 layer 1 assets has compared with that of the top 6 meme coins recently:
As displayed in the above graph, the Social Dominance of the memecoins had shot up earlier as Bitcoin and others had rallied, suggesting that investors had started paying attention to these speculative assets.
This interest in the meme coins, though, ended up coinciding with the market top. “Typically, markets correct when focus shifts away from layer 1’s and toward more speculative assets due to greed,” explains the analytics firm.
With Dogecoin and Shiba Inu pulling away from the pack during the past day, it seems the investor greed is still high, which can potentially lead to more bearish action for Bitcoin and other top assets.
From the chart, it’s visible that the market has tended to reach bottoms when attention has shifted back to the layer 1 networks, so it’s possible that this may have to happen again if the sector-wide run has to continue.