Although there are some who would probably like to, there’s no denying that Dogecoin has been performing like nobody’s business lately. The fact that it has been doing so well, reportedly as a result of a campaign on TikTok, stands as evidence that the crypto markets are alive and well, and taking newcomers. The best sort of pump involves a lot of new money coming into a given market. In the case of altcoins, it can be dozens or even hundreds of markets that need injections of capital. Often enough, this capital enters through Bitcoin and Ethereum, those being the easiest cryptos to get hold of, and then is invested into the altcoin markets.
Alt Season “Imminent”?
As we say on another part of this website, if “alts are enjoying a fruitful period, Dogecoin’s performance is often used as a signal that an alt season is imminent.” Alt season, of course, refers to a period of time where altcoins are trading handily against larger cryptos, such as Bitcoin, and where it makes a lot of sense to invest in altcoins.
Altcoins enjoy their place in the world almost at the grace of Bitcoin. Were the price of Bitcoin to tank significantly, so too would the price of most alts, as many are not even traded against the dollar except in rare instances. Dogecoin is an exception to this rule, being available in multiple USD markets, including, importantly, Coinbase.
The crypto market knows when it’s bad enough, and then boom, things start to improve with the rise and rise of Dogecoin. By time of writing, the cryptocurrency had seen a gain of around $0.001500 per token. That was after a period in which the coin’s value had doubled, a few days back.
Thus, if things are pumping for Dogecoin, we assume it must be going well in other crypto markets, or that it will be soon. It’s one way that long traders look at things: how is Dogecoin doing, versus other cryptos? Not that Dogecoin is a surefire way to make money. It might very well be far from it. But it is a good barometer, if you pay attention to it, on the market at large.
The Alt Market
While many other alts were down as well, some like Ontology had gained a few percentage points. The market, of course, looks nothing like it did in 2017, when you had dozens of tokens with values over $100. A wise man might have called the whole thing out of control. After all, there was little to sustain all that capital.
While some altcoins are based on a philosophy or idea, Dogecoin was originally just a joke of a coin. It has unlimited inflation, which makes the token hard to really take seriously. Nevertheless, when people are willing to get into it, it’s a sign that things are about to go well in the broader crypto market.
No, something like Bitcoin doesn’t necessarily take its cues from Dogecoin. Bitcoin has its own madness to contend with, with the hundreds of fiat markets trading it. But the rest of the alt world may understand that when Dogecoin is pumping, interest in alts is real. When interest is real, money gets real.
The price of Bitcoin will generally be more important than the price of Dogecoin, but to the altcoin market, both can be a sign of how things are set to go.