On Wednesday, Dogecoin (DOGE) witnessed a rerun of Doge Day continuing its climb of the crypto rankings. The meme token has overtaken XRP, thus becoming the fourth largest cryptocurrency in terms of market capitalization: a price of $ 0.69 was reached, a target specifically indicated by traders on social media.
However, this growth may not be particularly genuine. Despite the hype surrounding Dogecoin (and its de facto captain, Elon Musk), publicly available data suggests that relatively few people are actually using the blockchain, and its users represent an incredibly large portion of their overall business.
On Tuesday, the dollar value of the tokens transferred through the Dogecoin blockchain exceeded $ 58 billion. This figure is 70% higher than the amount transferred to Bitcoin ($ 34 billion) and 260% higher than that on Ethereum ($ 16 billion).
Looking deeper into the on-chain data, we note that although Dogecoin moves a higher total value than the two largest cryptocurrencies in the world, it does so in significantly fewer transactions.
According to data from Bitinfocharts, yesterday the Ethereum blockchain recorded over 1.4 million transactions, while Bitcoin recorded almost 300,000. Comparing the figures with solo 76,000 transactions registered on the Dogecoin blockchain, an obvious wealth gap begins to emerge.
In fact, the average value of Dogecoin transactions on the day in question is almost double that of Bitcoin (BTC). The average transaction value in DOGE was $ 800,000, compared to BTC’s $ 420,000. The comparison with Ethereum highlights an even worse situation. Dogecoin’s average transaction value exceeded Ethereum’s by 8,000%, despite the number of transfers being only 5% of the latter.
Considering that a single address contains 28% of all existing coins, while only 12 addresses contain 67%, it is clear that Dogecoin is not exactly the people’s currency promoted on social networks.
A recently published report by Galaxy Digital raged further on DOGE as a project. Entitled “Dogecoin: The Most Honest Sh * tcoin,” the report points out that la repository di Dogecoin su GitHub (where updates to the blockchain code are recorded) has not been touched since 2017. Furthermore, the number of fully synchronized nodes (computers that manage copies of the Dogecoin blockchain) corresponds to only 26% of the total count, suggesting that few people are willing to go out of their way to maintain the security of the blockchain.
But although the Dogecoin network looks like a ghost town, the obvious reality remains that the token is one of the best performing digital assets in the crypto sector. DOGE has seen growth of 14,000% since January 1, when it was valued at a fraction of a cent.
Both the credit and the blame for the seemingly irrational rise of DOGE have been attributed to “Dogefather” himself, Elon Musk, who in the course of 2021 delighted in posting Doge memes to his 52 million Twitter followers.
However, it should be noted that the recent spike at $ 0.69 is the same target set by traders on Reddit determined to artificially pump DOGE’s valuation. According to initial plans, the price was supposed to reach that level on April 20 (4/20, the figure used on the web to indicate cannabis), but it took another two weeks to reach that target. Now, traders are aiming for the ultimate goal of $ 1.
If you’re looking for more evidence that markets aren’t always rational, just think of this year’s GameStop affair, where the share price of a nearly defunct company rose by more than 9,000%.
“Dogecoin has always been a joke, and it just keeps getting more fun,”Reads the Galaxy Digital report. Galaxy Digital author and research director Alex Thorn praised Dogecoin for his frankness, pointing out that the fate of the token is not tied to foundation announcements or promises from developers, and that its only goal is to arouse a reaction.
“Dogecoin’s longevity is assured as long as an obviousness remains obvious: people love jokes,Thorn concluded.