Dogecoin’s 102% Spike Steals the Spotlight as October Ends

Crypto markets fell on the final day of October, with bitcoin (BTC) declining 1.2% and ether (ETH) falling 1.8%. The two largest cryptocurrencies by market capitalization ended the month up 5% and 17%, respectively.

Dogecoin (DOGE), the Shibu-Inu themed meme coin, led all gainers for October, rising 102%, about 90% of which occurred during the last week. DOGE remains a top 10 cryptocurrency by market capitalization at approximately $15.6 billion.

Unlike BTC and ETH, whose fortunes appear tied to macroeconomic factors, burn rates and centralized exchange balances, dogecoin’s appeal appears to stem from community, personality (Elon Musk) and the opportunity for outsized gains within a rapid period of time.

This week, crypto investors will be weighing a range of economic indicators. In the U.S. the Federal Open Market Committee (FOMC) announces its latest interest rate decision, a widely expected 75 basis point increase. The Bureau of Labor Statistics will release its latest jobs data while the Institute for Supply Management issues its October manufacturing report.

Yet, dogecoin will likely remain more affected by the utterances and actions of newly minted Twitter owner, billionaire and DOGE advocate Elon Musk.

DOGE supporters may view their investments as a sub-$1 vote of confidence in Musk’s business acumen, which has significant upside and limited downside.

The correlation coefficients for DOGE compared with bitcoin and ether are 0.78 and 0.85, respectively. Correlation coefficients range from 1 to -1, with the former indicating a direct pricing relationship and the latter signaling a completely inverse relationship.

So despite seemingly being driven by different factors, DOGE maintains a surprisingly strong correlation to both BTC and ETH.

Unusual weekend activity in DOGE appears to depart from its more traditional counterparts, despite their correlations.

While Saturday trading volume for BTC and ETH fell within normal ranges, DOGE volume was eight times more than its 20-day moving average on the day. Sharp price increases in conjunction with high volume are often a bullish sign for an asset.

DOGE’s increase came in conjunction with excessive liquidations, and a likely short squeeze, which may also give investors pause. The recent run-up may also make DOGE an attractive short candidate for traders who do not believe in the price move. For those of that mindset, a potential price target may be at 7 cents where significant past trading activity has occurred.

DOGE is also trading 60% higher than its 20-day moving average, and has pushed significantly past the upper range of its Bollinger Bands, which sat at the approximately 7 cents mark prior to the Twitter acquisition.

The Relative Strength Index (RSI) for DOGE is showing as significantly overbought now at 88.60, its highest reading since April 2021.