It was the afternoon of Doge’s Day again on Wednesday as Dogecoin (DOGE) continued its assault on the cryptocurrency market capitalization rankings. The coin has surpassed XRP (XRP) to become the fourth largest cryptocurrency in terms of implied market cap, after hitting a per-coin valuation of $ 0.69 – a target specifically set by traders on social media. .
But the latest cryptocurrency media darling may not be as healthy as it looks. Despite all the hype surrounding Dogecoin (and its de facto master Elon Musk), publicly available data suggests that a relatively small number of people actually use blockchain and those who do represent an incredibly large part of its overall business.
Consider that the dollar value of coins sent through the Dogecoin blockchain on May 4 has exceeded $ 58 billion. This figure was 70% higher than the amount transferred to Bitcoin ($ 34 billion) and 260% higher than to Ethereum ($ 16 billion).
Digging deeper into the on-chain data, we see that while Dogecoin transfers a higher coin value than the two largest cryptocurrencies in the world, it has achieved this with a mere fraction of their transactions.
Over 1.4 million transactions were counted on the Ethereum blockchain yesterday, according to data from Bitinfocharts, while nearly 300,000 were counted on Bitcoin. Compare that to just 76,000 registered on the Dogecoin blockchain, and an apparent wealth gap is starting to emerge.
Indeed, when we look at the average value of Dogecoin transactions on the day in question, it was almost double that recorded on Bitcoin. The average value of DOGE trades was $ 800,000, compared to $ 420,000 on BTC. Its Ethereum statistics paint an even more dire picture: Dogecoin’s average transaction value exceeded Ethereum’s by 8,000%, despite processing only 5% of the number of transactions.
Combined with the long-held reality that a single address holds 28% of all existing coins, while only 12 represent 67%, it becomes clear that Dogecoin is not exactly the people’s champion that interested parties would want to make. believe in the public.
A recently released report by Galaxy Digital stacked on the misery regarding Dogecoin’s general lack of authenticity as a true cryptocurrency project. Entitled “Dogecoin: The Most Honest Sh * tcoin,” the report highlighted the fact that Dogecoin’s Github repository (where blockchain code updates are recorded by developers) has not been touched since 2017. In addition, the number of fully synchronized nodes (the computers running copies of the Dogecoin blockchain) is only 26% of the total number of nodes, suggesting that few people are willing to put in the effort to maintain the security of the blockchain network.
But even though the niche looks like a ghost town, the glaring reality remains that Dogecoin is the top performing digital asset in the cryptocurrency space. The coin has grown by 14,000% since Jan. 1, when it was priced at a fraction of a cent.
Credit and responsibility for Doge’s seemingly irrational rise has been given to “Dogefather” himself, Elon Musk, who took great pleasure in posting Doge memes to his 52 million Twitter followers for much of the time. from 2021.
However, it’s also worth noting that the coin’s recent high of $ 0.69 is the same price target set by traders on Reddit who want to artificially pump DOGE’s valuation. The price was originally slated to be met on April 20 – a joke in addition to a joke on day 4/20. Dogecoin only hit a price of $ 0.420 back then (boom), but now, just over two weeks later, it has finally hit its fun goals. The ultimate price sought by traders is one dollar.
If more evidence is needed that markets aren’t always rational, look no further than this year’s GameStop pump, where the share price of a near-dead brand rose more than 9,000%.
“Dogecoin has always been a joke, and the joke just keeps getting funnier,” the Galaxy Digital report said. Report author and firm-wide research lead at Galaxy, Alex Thorn, praised Dogecoin for its unpretentiousness, noting that the coin’s fortune was unrelated to announcements by foundation or developers’ promises and that its sole purpose was to elicit a reaction. .
“Dogecoin’s longevity is assured as long as one truism remains: people love a good joke,” Thorn concluded.