Let’s analyze the growth of DOGE coin following Elon Musk’s acquisition of Twitter!
Twitter enters a new era as it announced on Monday that it will become a privately held company following its board of directors accepting a bid to purchase the company at roughly $44 billion.
Naturally, this news had an immediate effect on Elon’s favorite coin, Dogecoin, which as of the time of writing, has soared by 29.5% since the deal was announced.
Despite the many critics, Dogecoin had an incredible run in 2021 as it set new highs and claimed 4th place by market capitalization, taking over crypto-assets such as XRP, ADA, USDT, or UNI. While these anecdotes highlight the outlier scenarios, on-chain data provides a more accurate picture of the immediate effects the announcement had, not only on the token but on key indicators.
The recent hype was reflected in the derivatives activity, as perpetual swaps traders rushed to buy the news. Perpetual swaps use so-called funding rates to incentivize derivatives contracts’ price to be artificially pegged to spot prices. In short, when perpetuals’ prices are above spot, long holders pay short holders the funding rate, creating downward pressure to restore the peg between the two.
Following the recent announcement, funding rates across several exchanges changed from negative or neutral to positive. This means that derivatives traders went from being a neutral stance to being significantly long.
But the recent announcement also had an interesting effect on the type of buyers that acted yesterday. The total volume belonging to traders – addresses holding for less than 30 days, has decreased by 61.77%, indicating that high volume traders may no longer be holding.
So who bought it yesterday? IntoTheBlock categorizes on-chain transfers of over $100,000 as Large Transactions. The aggregate volume in large transactions serves as a proxy to institutional investors and high net worth individuals’ transaction activity.
DOGE had experienced a dramatic slow-down in on-chain activity, as the total value transacted in USD above $100k was averaging below $500.
Yesterday, we experienced an impressive surge in the volume of these transactions, reaching a monthly high of $2.59 billion. But what’s more interesting about this is, that it represented roughly 94% of the total on-chain volume on Dogecoin yesterday. Looks like yesterday’s reaction wasn’t about retail but institutional.
Although it is too early to tell what will happen, Elon’s acquisition may have a positive effect on Dogecoin, as we are seeing a rise in key on-chain metrics.
Considering investing? Buy DOGE now on Bitget!
This article is written by Daniel Ferraro, Head of Marketing at IntoTheBlock. In the partnership between IntoTheBlock and Bitget, we are thrilled to serve the greater good by giving Bitget users easy access to financial solutions as well as promoting financial and technological literacy via data analytic tools.
The information provided above is not financial advice but for educational purposes. All opinions expressed on this article are opinions of the author, and do not reflect the opinions of Bitget or its affiliate companies and partners. Please do your own due diligence or consult a financial advisor before investing in any digital assets.