Dogecoin has recently seen a massive drop in its value due to a tweet from Tesla and Twitter CEO Elon Musk. The CEO modified the Twitter logo from the bluebird image to the DOGE logo which caused the cryptocurrency to spike by more than 20%. After the logo was deleted, the original bluebird logo was posted again, which initiated fear in the market and made traders liquidate, causing the price to drop significantly.

The influence of miners selling their block rewards is something that should not be neglected. Dogecoin miners have control of 3.3% of the total supply of Dogecoin and, therefore, the selling pressure which they can impose on the market can be massive.

The community around Dogecoin is still very enthusiastic and optimistic about the future of Dogecoin and hope that Musk will eventually adopt it as the official currency of Twitter. However, that move may bring about regulatory attention as it is yet to be seen how Musk will carry it out.

The open interest for Dogecoin and the highly imbalanced funding rate are clear signals of an upcoming pullback if the market doesn't turn positive in the near future. If this is the case, traders who use margin or borrowed funds could be forced out of their positions, which would result in an automatic sell off of holdings and would strongly contribute to the downward pressure on the cryptocurrency.

Finally, Ali Martinez, a well-known cryptocurrency researcher, warned of the looming correction days before it happened. His statement that "sell when FOMO, buy when fear" is something to keep in mind when trading. Furthermore, Bitcoin is still trading sideways, meaning the capital influx which altcoins need to skyrocket is not yet present. Though, it's still interesting to observe the excitement fed by the Dogecoin community. In conclusion, it is advised that traders be careful and not risk their funds when it comes to Dogecoin.



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