Thursday, June 20, 2024

Dogecoin jumps 44% in one day as traders rotate Shiba Inu profits into DOGE

Dogecoin (DOGE) soared on Oct. 28 amid massive capital rotations out of its top meme coin rival Shiba Inu’s (SHIB) market.

Notably, the DOGE price rallied by a little over 44% to reach its intraday high of $0.3449. Its gains appeared in contrast to SHIB’s losses in the same period. On the other hand, the so-called Dogecoin Killer dropped almost 28% to log an intraday low at around $0.00005700—in the same hour DOGE printed its daily top.

SHIB/USD vs. DOGE/USD daily price chart noting inverse correlation. Source: TradingView

The sudden price rally also pushed Dogecoin’s market cap over $40 billion, a mettle Shiba Inu achieved hours before, with the two cryptocurrencies now neck and neck currently battling for the ninth place by market cap

Traders started flocking into Dogecoin markets hours after Elon Musk, the CEO of Tesla and SpaceX posted a new tweet about the meme cryptocurrency. 

Musk’s earlier supportive tweets prompted DOGE to climb by more than 1,500% in the first five months of 2021.

Long DOGE, Short SHIB

Shiba Inu rallied exponentially heading into Q4, rising by around 1,200% in October on hopes that it would gain a listing on Robinhood, a U.S.-based zero-fee trading app, and its foray into the emerging decentralized finance (DeFi) and nonfungible token (NFT) sectors with new product launches.

Nonetheless, SHIB’s supersonic bull run also made it overvalued based on some key metrics, notably the Relative Strength Index. So it appears, spot and derivative traders decided to secure/rotate their profits. 

Su Zhu, co-founder, CEO, and CIO at fund management firm Three Arrow Capital noted earlier on Thursday that traders rotated their easy-to-short Shiba Inu perpetual swap profits — as SHIB topped out at $0.00008854 — into the Dogecoin perpetual market.

The former Deutsche Bank trader suggested that DOGE can rally toward $0.88 next should traders rotate profits from SHIB to Dogecoin. 

Around $20.8M DOGE rekt

Dogecoin’s price moves also caught derivatives traders off-guard as they lost about $20.80 million in total liquidations across the previous 24 hours. Around $18.17 million worth of those liquidations emerged out of leveraged long bets after the DOGE price dropped to its weekly low of $0.2179 Wednesday.

In contrast, the ongoing 12-hour timeframe saw bears making more losses than bulls, with $8.9 million worth of bearish Dogecoin bets getting liquidated against $5.22 million worth of bullish bets concerning the same token.

DOGE total liquidations across all exchanges. Source: 

On the whole, however, Dogecoin traders were the majority short in the previous 24 hours, with FTX and OKEx users turning out to be exceptionally bullish with 58% and 77% of their net positions skewed long.

A sudden bearish reversal in the Shiba Inu market also led to SHIB liquidations worth $31.41 million, the third highest among all the cryptocurrencies in the previous 24 hours.

Related: Shiba Inu risks drop with SHIB’s 574% October’s price rally near exhaustion

PostyXBT, an independent market analyst, warned about excessive leverages in both SHIB and DOGE markets. 

“Play spot and not leverage,” he said, adding that “the volatility could quite easily wipe out before a big move in intended direction.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.

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