Last week, was big for Dogecoin as the cryptocurrency soared to $0.70 on Wednesday morning after hitting all-time high after all-time high.
However, the price came crashing down during the early hours of Sunday after Tesla’s Elon Musk, a longtime advocate and self-proclaimed ‘Dogefather’, commented that it is all a ‘hustle’ on the Saturday Night Live’s (SNL) show.
Mr Musk, responding to the show host, Michael Che asking for a definition of dogecoin, explained that “it’s the future of currency. It’s an unstoppable financial vehicle that’s going to take over the world … I keep telling you, it’s the cryptocurrency you can trade for conventional money.”
When Che inquired if that means the crypto is just a ‘hustle’, Musk agrees, saying “Yeah, it’s a hustle.”
After Musks comment, Dogecoin price declined nearly 22% from 64 Cents to 50 cents according to data from Coindesk.
Some experts however believe that the cause of the dip goes beyond just Elon Musk’s comments. An investor told this correspondent that the Dogefather’s joking comment only ignited the crash that had been looming since the coin reached an all-time high.
Market Trend – A new peak price is followed by a fall in price
His explanation is not so alien as Dogecoin price has a history of high volatility. And this could be because the crypto was first established back in 2013 as a joke.
Dogecoin is already the fourth-largest cryptocurrency as per CoinMarketCap.
Although promotions by celebrities like Jordan Belford and Elon Musk have increased doge’s popularity, the coin has a very huge supply, and around 10 million Dogecoin are added to the supply each day.
This means that in order for the prices to keep rising, people would have to keep pumping more and more money into it. This is unsustainable in the long run.
According to experts, it’s normal for people to sell the coin for enormous profits after it reaches an all-time high. However, it brings the price down and as the price falls, people start selling out of fear, as they don’t want to lose money on their investments.
He added that this creates a chain reaction of sellers which brought down the price of the Doge significantly in a short amount of time.
Large amounts of Dogecoin being sold off by institutional investors and whales
Before the crash, Doge reached $0.70 but didn’t hit the $1 mark that so many Dogecoin fans desired. Multiple Reddit users believe that the rally didn’t break the milestone because the coin’s rise was being limited by major investors.
According to InvestorPlace, the users believe a single whale is keeping the price of DOGE down by selling off millions of tokens every hour.
Some others suggest it might be large investors all cashing out their Dogecoin holdings because of the high spikes in value.
Whichever is right, the speculations point to the fact that Whales may have been responsible for the crash.
Over the past month, the price of Dogecoin has gone up from $0.5 at the beginning of April to about $0.72, which is about a 1400 per cent rise in price.
Despite the crash, the currency has gradually begun to recover as it is currently trading at 55 cents with a market cap of $70.87 billion, at the time of filing this report.
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