Dogecoin and Shiba Inu, two popular meme tokens in the cryptocurrency trading world, experienced a 9% increase in the past 24 hours. This rise suggests that traders are taking riskier bets due to Bitcoin’s strong performance. The surge in prices for SHIB and DOGE tokens on Thursday can be attributed to the announcement of a video calling feature for premium users on the social media platform X (formerly Twitter). This news sparked irrational exuberance among traders, who have been anticipating X to add DOGE as a payment option.
Elon Musk’s Influence on Dogecoin and Shiba Inu
Elon Musk, the CEO of X, has been a vocal supporter of dogecoin, even dedicating a segment to the meme coin during his appearance on “Saturday Night Live” in 2021. In April, Twitter briefly changed its logo to the dogecoin logo, leading to a rally that resulted in a 37% gain for some traders.
Trading Volumes and Open Interest in DOGE and SHIB
According to data, the cumulative trading volumes for these tokens surged to $1.2 billion on Thursday from $350 million on Monday. Additionally, open interest in DOGE and SHIB futures increased by over 50%, indicating that traders are placing larger bets in anticipation of more volatility in the coming days.
Performance Comparison with Major Cryptocurrencies
While bitcoin’s price rose by 30% in the past week, DOGE and SHIB only added 15% during the same period. Despite being more volatile, these tokens underperformed compared to other major cryptocurrencies.
A Historical Trend: Dogecoin Price Surge and Market Crash
Interestingly, a historical trend has been observed where a surge in the price of DOGE often signals a market-wide crash shortly after. Santiment, a blockchain analytics firm, reported that there have been eight instances where dogecoin’s price spike marked the local top for bitcoin and the overall crypto market in 2022.
Caution for Traders in Cryptocurrency Trading
In light of the historical trend where a surge in DOGE’s price often precedes a market crash, traders should exercise caution when making bets on these meme tokens. The recent increase in the prices of dogecoin and shiba inu tokens can be attributed to the announcement of a new feature on X, but it is essential for traders to be aware of the potential risks involved in cryptocurrency trading, especially with meme tokens like DOGE and SHIB.
Conclusion
The popularity of Dogecoin and Shiba Inu in the cryptocurrency trading world continues to grow, with recent price increases driven by the announcement of a new feature on the social media platform X. However, traders should be cautious when investing in these meme tokens, as historical trends have shown that a surge in DOGE’s price often precedes a market crash. By staying informed and considering the potential risks associated with cryptocurrency trading, investors can make more informed decisions and better navigate the volatile world of digital currencies.
