Dogecoin's price continues to defy gravity, having risen 24% since Twitter owner Elon Musk changed the famous blue bird logo to the meme of a Shiba Inu dog.
The memecoin currently trades at $0.09564 on Binance, where the DOGE/USDT pair accounts for roughly 18% of total dogecoin trading volume in the past 24 hours.
The price initially peaked on Monday, following Musk's move to add the logo to Twitter's website. Volumes have been in decline since Tuesday, according to Binance data via TradingView.
Analysts say that choppy waters are likely to come.
"Dogecoin liquidity is down roughly 10% in the last two weeks and plummeted -60% briefly as its price rallied on Monday," Conor Ryder, research analyst at Kaiko, told The Block. "With a meme token like DOGE, the majority of its big moves come from narratives, and illiquidity acts as a leveraging force on the size of those moves," he added.
Market depth in crypto is at 10-month lows, Ryder noted, meaning it's getting easier and easier to move prices with a smaller-sized order.
The moves in dogecoin are no different, he said, adding that "it benefited from its illiquidity, but there is equally little support to the downside - investors can expect more volatility in the "short term."
Matt Kunke, a research analyst at market-maker GSR, shared a similar sentiment, saying dynamics driven by "Musk’s sporadic behavior" have been "short-lived historically."
Dogecoin has a history of moving based on what Musk says or is expected to do.
In October, the coin rallied following his acquisition of Twitter. It crashed a few days after reports circulated that Musk wouldn't integrate crypto payments — and dogecoin specifically — into the platform.
Musk is now the target of a proposed class-action lawsuit over alleged market manipulation.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.