- Dogecoin’s price spiked unexpectedly soon after Elon Musk’s 25 January tweet.
- Traders remained optimistic despite potential short-term selling pressure.
On the morning of 29 January, Dogecoin was trending on Twitter. In fact, there was even a spike in its social volume metric.
Now, you may wonder, what exactly was the reason behind it. Well, reportedly, a recent tweet by Elon Musk potentially sparked interest in Dogecoin.
In the tweet, Musk mentioned that he would be interested in eating McDonald’s if Dogecoin was accepted as a valid form of payment by the American multinational fast food chain.
This tweet created a stir on social media, with many speculating about the potential impact of the tweet on the price of the meme coin.
Interestingly, even the McDonald’s team joined in on the activity, further fueling speculation.
I will eat a happy meal on tv if @McDonalds accepts Dogecoin
— Mr. Tweet (@elonmusk) January 25, 2022
The center of attention
As a result of this increased attention, categorically, social mentions and engagements for Dogecoin saw a jump. According to data from LunarCrush, Doge’s social mentions grew by 4% over the last week, along with a corresponding increase in engagements.
Realistic or not, here’s DOGE’s market cap in BTC’s terms
As the value of Dogecoin rose, so did the MVRV ratio, indicating that many Dogecoin holders may have the opportunity to sell their holdings for a profit.
Furthermore, the negative long/short difference suggested that these profitable addresses belonged to short-term holders. Thus, raising the possibility of them selling their DOGE holdings for financial gain. This could impact DOGE negatively in the future.
Source: Dogecoin
Traders are “lovin it”
Besides, the number of long positions on Dogecoin continued to increase materially. According to coinglass’ data, over the last month, the number of long positions made by top traders grew from 71% to 77%.
This implied that most traders were extremely optimistic about DOGE’s future at the time of writing.
coinglass
Additionally, miners’ interest also increased in Dogecoin; consider the growing hashrate for that matter. Well, this increased hashrate could potentially lead to increased stability, as it is a well-known fact that more miners provide more computational power to secure the network.
Is your portfolio green? Check out the DOGE Profit Calculator
Source: Messari
However, given the fact that DOGE is a meme coin, the future of this cryptocurrency remains uncertain. As with any memecoin, the value of Dogecoin is highly volatile and can fluctuate significantly in a short period of time.
At the time of writing, the price of DOGE was $0.08863 after it decreased by 2.00% in the last 24 hours according to CoinMarketCap.
Therefore, doubling down on DOGE in the short term might not be a good idea for traders who are avoiding risks.