The eight-year old altcoin seems to be a bellwether for altcoin rallies every time it pumps.
Dogecoin (DOGE) has been the poster child of altcoins for a very long time, particularly as it’s been around since 2013, making it one of the oldest cryptocurrencies in existence. The inflationary meme-coin quickly became synonymous with wild price pumps due to its small nominal value and concentrated holdings.
Doge starts altseason by the way in case you’ve forgot.
— BIG DOG (@MoonOverlord) April 16, 2021
Such unprecedented short-term price rallies history caused some investors to use DOGE price as a leading indicator for an altcoin season.
But this probably does make some sense. After all, Dogecoin is nothing more than a meme-based coin. There has been no development activity over the past couple of years, and not that many of its users run a full node.
Dogecoin historical pumps since 2017. Source: TradingView
Also, take notice of how incredible price moves have been the norm rather than an exception for Dogecoin in the past four years. There have been 16 weekly performances higher than 30% and six of those presented 100% or higher gains.
If major Dogecoin holders sell most of their coins, it will get my full support. Too much concentration is the only real issue imo.
— Elon Musk (@elonmusk) February 14, 2021
To this day, the top 693 addresses keep 79.2% of the total DOGE in circulation. This astonishing statistic has even been a large source of criticism by Elon Musk, the CEO of Tesla and SpaceX. It is worth highlighting that the most recent price spikes have been directly linked to Musk’s memes and tweets revolving around Dogecoin.
However, for one to claim that Dogecoin is effectively an altcoin season indicator, there must be evidence of such pumps preceding the broader market positive performance.
July 2020 total altcoin market cap vs. Dogecoin, USD. Source: TradingView
On July 7, 2020, DOGE posted a 73% gain in less than 36 hours. While the effect didn’t last for more than three days, altcoins did begin to surge in value a couple of weeks later. The altcoin market capitalization rose from $105 billion to $130 billion, which is a 24% increase in just 10 days.
Nov. 2020 total altcoin market cap vs. Dogecoin, USD. Source: TradingView
Meanwhile, the November 2020 pump tells a different story as DOGE followed the path of the remaining altcoins. Moreover, no altcoin season followed over the next weeks as market capitalization stabilized below $210 billion.
Early 2021 total altcoin market cap vs. Dogecoin, USD. Source: TradingView
On the other hand, the early-2021 incredible 182% DOGE pump that took place over the course of two days did signal an altseason. Some 36 hours later, the altcoin market cap initiated a 50% rally, boosting it to $340 billion.
An even more substantial effect took place on Jan. 18, as the meme-coin hiked over 1,000%. Three days later, the altcoin market cap started a 60% rally to $560 billion.
However, the most recent activity might provide different interpretations as the altcoin rally began some three weeks before Dogecoin aimed for new highs.
April 2021 total altcoin market cap vs Dogecoin, USD. Source: TradingView
Therefore, considering the five pumps analyzed, there have been three pieces of evidence of the Dogecoin pump preceding a broader altcoin rally. However, this incidence ratio might be enough for most adventurous traders.
It is worth noting that comparing such findings with other major altcoins would be a good idea before concluding that the meme-driven coin is effectively a good indicator for alt season. If Dogecoin lives up to its fame amid an onslaught of positive headlines, then the new $0.61 all-time high is a presage of positive momentum for altcoins.
Meanwhile, VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for DOGE on April 29, prior to the recent price rise.
The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
VORTECS™ Score (green) vs. DOGE price. Source: Cointelegraph Markets Pro
As seen in the chart above, the VORTECS™ Score began to climb on April 29 and reached a high of 72 before spiking to 77 again on May 3. It’s worth noting that the VORTECS™ Score peaked roughly 12 hours before the price spiked 45% to a new all-time high at $0.61.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.