On Saturday, the crypto market reached a new low when the world’s largest cryptocurrency fell to levels well below $20,000. On Sunday, all major cryptocurrencies recovered, with an increase of between five and 18 percent. Bitcoin is reselling more than $20,000.
Dogecoin is among the currencies that have seen the biggest rise. It’s the so-called memecoin – a cryptocurrency that has no purpose other than to joke that has gained a kind of cult status among crypto enthusiasts.
On Sunday at 08.19 Norwegian time, the coin jumped seven percent after Tesla chief Elon Musk tweeted, “I will continue to support Dogecoin.” In response to a question from another Twitter user, Musk confirmed that he is still buying the coin. At most, Dogecoin gained 20% on Sunday.
This isn’t the first time Dogecoin has been affected by Musk’s tweet. Last year, the coin surged several thousand percent after Musk, among other things, joked that Dogecoin would become the official currency in March.
If one is to believe Arcane’s crypto analyst, Vetle Andreas Gusgaard Lunde, today’s dogecoin example does not mean that Twitter king Musk has power over the crypto market forever.
For smaller cryptocurrencies, this has the effect of increasing prices. But in the last year and a half, we’ve seen the impact waned in strength and ours is getting less than before when Musk tweeted, Lunde told DN.
There are no systems
Arcane crypto-analyst Sofia Blikstad tells DN that Musk is not the only person who can influence the crypto market without anything other than approval.
She believes that a large part of the industry, from memecoins to NFTs, has proven to be very responsive to celebrity “approval”. The price of NFTs — so-called non-fungible tokens, a vast array of intangible digital assets in the form of everything from digital artwork, music, computer game figures, and digital designer shoes — has also collapsed in recent months.
– But in the liquidity crisis it dries up everywhere. The reason memecoins aren’t seemingly offloading as hard as the big names, is because there isn’t enough liquidity – one isn’t selling enough to make a big difference.
Both Blikstad and Lunde believe that the power of social media in the crypto market is proof that the market lacks regulations and is immature.
The so-called “relief march”
Although the cryptocurrency market saw a slight rally on Sunday, this does not mean that the market has finally bottomed, analysts believe.
Lunde explains that the cryptocurrency market now has sales periods often followed by a “relief rally,” which means the market is recovering.
If bitcoin closes at over $20,000, that’s promising, but it’s too early to think the sale is over.
At 22:00 on Sunday evening, the coin exceeded $20,000 again. Lund’s data was released earlier today, when bitcoin was trading at $19,600. During Sunday, the currency rose more than six percent.
At the time of writing, the cryptocurrency market has been characterized by liquidation of positions, resulting in lower prices and the prevailing mood in the market. Blikstad believes that this can be seen as a “healthy fade” in that major players in the cryptocurrency market are unable to repay loans and quickly sell them off.
As a long-term investor, you don’t want to be in a market that is driven by price action and short-term speculation, which, if we’re being honest, the cryptocurrency market has been pretty much the last couple of years. There are still many skeletons in the closet, but at some point this will empty itself, she says and adds:
When it is so easy for a 3AC crypto fund to amass 2 billion bad debts, one must assume there are other bad debts as well.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.
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