Dogecoin price last week rallied by 150 percent, logging one of its most significant increases in a three-day timeframe.
The explosive upside move came as a part of a coordinated pump caused by a viral TikTok campaign.
Nevertheless, the DOGE/USD exchange rate crashed hard upon topping at circa $0.00569 on July 8.
Bitcoin firm Ryze made a strong case against Dogecoin following the dump, stating that the meme cryptocurrency is behaving like crypto frenzies from 2017.
Dogecoin serves as a reminiscent of 2017’s notorious crypto frenzy, according to Ryze.
The Atlanta-based bitcoin firm, which creates automated trading solutions for crypto traders, called Dogecoin for its shady price behavior last week. It noted that the meme cryptocurrency behaved almost like “pump-and-dump scams” that duped investors of millions of dollars in 2017.
In retrospect, the Dogecoin price last week rose by up to 150 percent in just three days of trading.
The catalyst that drove its rate explosively upward was TikTok, a short-form video app having 800 million users worldwide. One of its users, James Galante, made a joke video about sending Dogecoin to $1 if everyone invests at least $25 into it.
The message went viral, leading to a dramatic spike in the Dogecoin rates across multiple exchanges.
Then follow us on Google News!
This tiktok I made the other day as a joke about Dogecoin went mega viral and now the crypto’s value is up 16% in the last 24hrs lol https://t.co/HimKE2VAD2
— James Galante (@Galante97) July 7, 2020
TikTok is the New Twitter
Ryze’s co-founder Abhay Aluri wrote in his weekly research note that daytraders used TikTok in the same way they used Telegram, Twitter, and Discord to pump-and-dump cryptocurrencies.
He further called the trend “dangerous” since it directly communicated with teenagers and younger adults with little-to-no experience in trading and investing.
“Young, inexperienced investors in their late teens/early 20’s heeding TikTok financial advice hoping to catch the next moonshot, can result in thousands of people getting burned and having a bad experience in crypto,” Mr. Aluri stated.
The concerns also heightened because of Dogecoin’s lack of use case. The cryptocurrency came to existence back in 2013 as a joke token. Its earlier days saw people spending it on making micropayments, such as tips and donations. It also served as a sponsor to NASCAR driver Josh Wise in 2014, which helped its popularity.
Dogecoin logo on NASCAR driver Josh Wise’s car. Source: Wikipedia
Nevertheless, Dogecoin failed to keep itself updated with the rest of the cryptocurrency market. Traders started losing interest as more attractive investment alternatives appeared in the form of Ethereum, EOS, Tezos, Chainlink, and others. Hence, it practically became a worthless token.
“Dogecoin was made in 2013 as a joke, it has no real use case,” Mr. Aluri asserted further.
Dogecoin Crashes 45%
As anticipated, the DOGE/USD pump failed to sustain itself beyond its yearly top of $0.00569.
The pair corrected lower extensively, falling by as much as 48.29 percent from the said level. Its next attempt to rise higher managed to add just 3 percent of gains to its rate. As of this time of writing, the DOGE/USD pair was trading 45 percent lower from its year-to-date high.
Dogecoin rally fizzles after topping out. Source: TradingView.com
But is it a signal of an extended downside correction? It cannot be foretold because of Dogecoin’s inclusion in the derivatives space.
OKEx last week announced that they are launching DOGE-enabled leveraged spot and perpetual swap contract trading. Its rival Binance also launched DOGE/USDT swap contracts. That practically makes Dogecoin more speculative than before, vulnerable to more pump-and-dumps in the future.
Bitcoinist.com is author of this content, TheBitcoinNews.com is is not responsible for the content of external sites.
TheBitcoinNews.com is here for you 24/7 to keep you informed on everything crypto. Like what we do? Tip us some BAT
Send Tip now!