Snoop Dogg and Gene Simmons join Elon’s Musk’s ‘Dogecoin army’

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Rapper Snoop dogg and Kiss’ Gene Simmons both voiced their support for the “Doge’s Army” over the weekend alongside Tesla CEO Elon Musk. As a result, the price of the cryptocurrency rose 27% again on February 7. DOGE is Dogecoin’s native cryptocurrency, which has become a household name in recent months.

Following the Gamestop and Robinhood saga, many traders have flocked to the cryptocurrency market. DOGE was the first cryptocurrency that saw the retail fear of running out (FOMO), especially among members of the r / Wallstreetbets community.

“Yeah. I bought some more Dogecoin,” Simmons wrote February 6, continued:

Why? Because I believe it will increase. But that’s just me, ”

DOGE / USDT 1 Day Candle Price Chart (Binance). Source: TradingView.com

Traders signal caution against DOGE rally

DOGE is widely regarded as a cryptocurrency even in the crypto market that started out as a joke. He doesn’t have a use case, but he has an active community around him.

Therefore, when DOGE starts to rally due to an unexpected catalyst, like Elon Musk’s DOGE meme or the ar / Wallstreetbets powered pump, it often sees an explosive bullish trend over a short period of time.

However, traders urge caution in dealing with Dogecoin. Donalt, a popular cryptocurrency trader and pseudonym, said the amount of “normie shilling” around DOGE is unprecedented.

The trader pointed out that long-term DOGE is not a favorable trade and will eventually go down, so traders should approach it with caution. It wrote:

“The current situation with DOGE is quite funny. Don’t think that we’ve seen this amount of Normie Shilling in this space before and that it’s for our beloved silly DOGE coin of all things. Every other day, another celebrity talks about DOGE. I see no reason to block trade. That said, if you try to get into DOGE for the long haul, you will give back everything you have done. So sell partials on the way up or try timing the top by analyzing how much steam is left in the normie shill tank. Buying DOGE should only be done with the sale in mind. “

When the r / Wallstreetbets rally occurred on January 29, DOGE’s trading volume briefly exceeded Bitcoin on Binance. This means that there is currently a lot of hype going on right now, which also suggests that a pullout shouldn’t come as a surprise.

There is a difference between DOGE now and before

During the DOGE price rally on January 29, the financing rate for futures contracts was very negative. On average, the funding rate of a cryptocurrency hovers around 0.01%.

At the time, DOGE’s term finance rate hovered around -0.1%. That meant he was 10 times lower than average during that time.

The term finance rate is a mechanism that induces buyers or sellers based on market equilibrium. If there are more buyers in the market, sellers have to pay buyers fees every eight hours.

If the finance rate is negative, it means sellers pay buyers, and if the rate is positive, buyers pay sellers.

Currently, DOGE’s funding rate is significantly above average, at around 0.1%. This makes a prolonged squeeze likely, which could lead to a short-term decline in cascading liquidations.