The hype around Dogecoin appears to be here to stay, as tweets from Tesla Inc TSLA's Elon Musk have been driving market sentiment up even further.
What happened: The meme-based cryptocurrency, DOGE, was trading at $0.05692 at press time and its market cap rose to over $7 billion.
DOGE’s price remained flat for several years before its unprecedented 600% rally in January, sending the cryptocurrency to new highs.
However, attempting to predict the price movement of DOGE based on technical indicators has proven to be exceptionally difficult.
Instead, analysts looked to metrics such as social volume and trading volume to anticipate price movement.
Why it matters: According to data from on-chain analytics platform, Santiment, Elon Musk’s tweet caused a huge amount of talks around DOGE on platforms such as Reddit, Twitter, Discord, Telegram.
Santiment suggests that peak social hype happens on lower prices, while the final price top is followed by less social volume than the previous top. This forms a divergence between price and social volume.
Data also shows that a similar divergence is observed between price and trading volume, which is another measure of gauging crowd interest in the token.
The charts show that the highest amount of crowd interest has been on the previous price peak, which was not the top. The latest top, which was observed a week ago, happened on both social and trading volumes.
According to analysts at Santiment, “Dogecoin could be in danger. Unless it's social volume and trading volume overtake 29 Jan peaks.”
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