When Elon Musk “set the bird free” with his acquisition of Twitter on Friday afternoon, it seems he also unleashed the hounds, sending the meme-inspired token Dogecoin (DOGE) on a face-melting surge. Showing blatant disregard for the bear market, the token temporarily reached a high US$0.15 on Saturday, an increase of more than 150% from Tuesday.
Now, Dogecoin has settled down a little and is currently trading for US$0.11, which still marks a remarkable 91% gain over the past seven days.
In the past week, Dogecoin’s total valuation has grown from around US$8 billion to US$15.2 billion at the time of writing, overtaking major altcoins such as Cardano and Solana. In the process, it secured its place as the eighth largest cryptocurrency by market capitalisation. To put that number in perspective, DOGE’s current market cap exceeds that of the bottom 120 of the top 500 companies listed on the S&P 500.
While it’s hard to pinpoint an exact cause for why DOGE ran so hard, it seems relatively clear that Elon Musk’s long relationship with the token was an enormous factor.
Musk has made reference to DOGE in numerous tweets and has even adopted it as a payment method for many of the products that his numerous companies offer. DOGE holders can use the token to purchase merch from both Tesla and the Boring Company websites.
Musk has even gone as far as suggesting that Dogecoin be used to limit the amount of spam on the Twitter platform, first mentioning the idea in a conversation with Steve Davis, president of The Boring Company.
In correspondence with The Chainsaw, a representative from the Australian crypto exchange Swyftx reported that trading volumes for Dogecoin surged over 1685% in the days leading up to Elon Musk’s acquisition of Twitter, making it the fourth most-traded asset on the platform.
Dogecoin gets an upgrade with Dogechain
While Elon definitely played an integral role in causing the token’s short term gain, there were a few more lesser known factors feeding into its price action just beneath the surface.
Another major drive of DOGE’s price action was the recent addition of a Layer 2 blockchain, dubbed Dogechain, which is marketing itself as “improving the usability of the original Dogecoin blockchain”. Dogechain is built on the Polygon (MATIC) network and enables developers to build decentralised applications (dApps) on top of the Dogecoin network.
This is said to be an integral part of building the “next generation” of DOGE, where holders can start using their Dogecoin for lending and borrowing in the world of Decentralised Finance (DeFi).
Dogecoin related price predictions
According to data from the crypto analytics firm Santiment, Shiba Inu (SHIB) — a self-proclaimed “Dogecoin killer” and fellow dog token — has historically been quite closely linked to DOGE’s price action. Typically, SHIB follows DOGE and often continues to gain while DOGE subsides. As a result, automated analysis from WalletInvestor expects that the SHIB token could experience a delayed rally sometime in the near future.
SHIB is currently up 16% for the week and is currently the 13th largest cryptocurrency by market cap with a total valuation of US$6.5 billion.