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The cryptocurrency market has been on a wild ride so far in 2021 as several sub-sectors including decentralized finance (DeFi), non-fungible tokens (NFT), memecoins, and layer two solutions, saw their total value locked in and token prices skyrocket to new highs.
One of the biggest achievements of the year was Dogecoin (DOGE), a simple “joke” cryptocurrency that has grown into a darling in the cryptocurrency industry. Interestingly, over the past month the project has gained momentum again and several data points suggest sentiment for the DOGE is becoming increasingly bullish.
The three reasons analysts and traders are developing a more optimistic outlook for DOGE include increased on-chain activity, increased trading volumes on major exchanges, and increased attention from major influencers.
Chain activity shows increased usage
The ability to attract new token holders is one of the most important factors for the long-term viability of a cryptocurrency project, as new users help increase token speed and overall demand.
As seen in the following tweet from Philip Gradwell, Chief Economist at Chainalysis, Dogecoin adoption is currently at its highest level since the 2017 bull market, with new users holding the token for less than six months. currently holding 25% of the outstanding supply. .
On the channel, Doge is being adopted by new investors at a level not seen since the bull market in late 2017, with new investors increasing their share of the offer from 9% in July 2020 to 25% in August 2021. pic.twitter.com/W782qNhyMW
– Philip Gradwell (@philip_gradwell) August 16, 2021
A follow-up tweet from Gradwell provided a deeper insight into Dogecoin’s on-chain activity, which averaged 32,000 Daily Active Users (DAUs) in 2021.
Gradwell said:
“Doge had an average of 32,000 On-Chain Daily Active Users (DAUs) in 2021, and that has moved with the price. There is an R-value of 0.7 between the percent change in DAU and the percent change in the Doge price in 2021 so far. “
Trade volumes are on the rise
A second reason for the increased attention of analysts towards DOGE is the increase in trading volumes on some of the largest exchanges, including Coinbase.
As seen in the following tweet from Pentoshi, a pseudonymous Twitter analyst, DOGE’s 24-hour trading volume on Coinbase averaged $ 200 million per day over the previous week.
I just saw the $ DOGE volume on Coinbase last week and my god
There have been massive USD 200 million per day buyers of Doge in volume on CB alone (DIrect fiat on ramp) from a week ago
While I’m not trading it at $ 1 +, I think it will. My goal is .40-.45 pic.twitter.com/VBtdAWtdjk
– Pentoshi don’t DM you (@ Pentosh1) August 15, 2021
Coinbase is the largest fiat ramp in the United States, and this spike in merchant activity could be a sign that retail investors are cramming into DOGE and possibly other sub $ 1 tokens.
Related: Coinbase beats earnings estimates as analysts say regulation ‘will stifle’ innovation
Mark Cuban touts the benefits of Dogecoin
A third reason for the bullish sentiment surrounding Dogecoin is the recent comment from high-profile influencers such as Mark Cuban, who once again touts Dogecoin’s benefits as a payment rail for his legion of Twitter followers.
The point about DOGE that people miss is that DOGE’s imperfections and simplicity are its greatest strengths. You can only use it to do 2 things: spend it or the HODL. Both are easy to understand. And it’s cheap to buy. Which makes it a community that anyone can join and enjoy.
– Mark Cuban (@mcuban) August 15, 2021
Cuba’s focus on Dogecoin has angered some Bitcoin (BTC) fans who implored the Shark aquarium star for simply “Buy a stack of Bitcoin and stop the doge shill,” a sentiment to which Cuban responded directly and stressed that the move was largely in response to user demand.
Cuban noted:
“I’m not afraid of Doge. I shill the products and services of my companies. Where we allow people to pay in ANY crypto, 95% of sales are in DOGE. Customers CHOOSE to use DOGE. We can discuss anything and everything about BTC, but right now DOGE is the people’s way to pay. “
The positive momentum change for Dogecoin was also recorded in VORTECS ™ data from Cointelegraph Markets Pro, which began to detect a bullish outlook on August 9, ahead of the recent price hike.
The VORTECS ™ score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trade volume, recent price movements and activity Twitter.
As shown in the graph above, the VORTECS ™ score for DOGE climbed into the green on August 7 and peaked at 72 on August 9, about 24 hours before its price rose 44% over the last few years. next six days.
The increase in on-chain activity and 24-hour trading volumes, along with the return of the DOGE promotion by popular influencers, allowed Dogecoin to potentially see its second bullish rally in 2021.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move comes with risk, and you should do your own research before making a decision.
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