Dogecoin sees stellar performance at the end of October
In the last week of October, Dogecoin became the cryptocurrency market's favourite in terms of growth, rising 110% in seven days. The meme cryptocurrency overtook top instruments and actively recovering newcomers alike.
The cryptocurrency's rapid growth followed news of Elon Musk's purchase of Twitter, when the entrepreneur confirmed his intention to acquire the company on 26 October. The deal was worth $44 billion. After an unsuccessful debut with Bitcoin (you can find out the reasons in the article 'How Elon Musk flirted with Bitcoin'), Musk turned his attention to Dogecoin. The coin can be used to pay for a number of goods and services at Tesla and other Musk projects, such as a trip on the Hyperloop.
The crypto community believes that it won't be long before Musk introduces Dogecoin to Twitter payments. Cardano founder Charles Hoskinson was one notable figure to mention this.
Anticipation of the growing recognition of Dogecoin sparked wide interest in the cryptocurrency, something which whales with wallets containing $100,000 or more couldn't help but take advantage of.
Bears suffered over $80 million in losses on short positions during the week. Trade volume also attests to a significant surge in interest in Dogecoin.
Traders and investors are rushing to get hold of the cryptocurrency that could become the central payment unit on a leading social network. However, they shouldn't forget what happened when Facebook and Telegram tried to introduce their own tokens. The experiments were dashed in a clash with financial regulators. For example, ECB spokesman Yves Mersch bluntly stated in 2019 that Libra "could reduce the ECB's control over the euro... and undermine the single currency's international role".
Dogecoin will most likely be adopted by Twitter to pay for a limited range of services or promotional products and will not be able to be widely used. Musk already burned himself with Bitcoin in China and likely isn't planning to learn about Dogecoin's environmental unfriendliness.
For reference, Tesla's refusal to accept Bitcoin for payments a month and a half after introducing it as a payment method was explained away by the cryptocurrency's poor environmental record. At the same time, Dogecoin relies on miners just as Bitcoin does and requires significant energy resources to maintain the network.
StormGain Analytics Team
(a cryptocurrency trading, exchange and storage platform)