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Can latest Doge-mania outlive Fed meeting?

Fresh from registering a monthly gain, major cryptocurrencies are extending October’s advance into November.

Here’s the recent performances of the world’s two biggest cryptocurrencies:

October was Bitcoin’s first monthly gain since May.
 

  • Ethereum: up 17.5% in October, its first monthly gain since July as prices punched above both the 50- and 100-day SMAs.

October saw Ethereum's first monthly gain since July

 

Dogecoin stands out amidst crypto gains

Dogecoin had an especially stunning end to October, doubling in price from $0.06 to break above $0.13 on Oct 31st, with prices now trading around $0.146 at the time of writing.

However, its most recent parabolic rise has more to do with the enthusiasm surrounding Elon Musk’s completed takeover of Twitter.

It is hoped that, with the Tesla CEO and so-called “Dogefather” at the helm of the social media platform, that would give fresh legs to broader crypto adoption and benefit the meme coin along the way, given its links with the Tesla CEO and the so-called “Dogefather”.

 

However, such optimism still needs to pass the test of time.

While Musk is perceived to be a proponent of cryptos, there are questions raised about how serious his commitment and aspirations for crypto are:

  • In 2021, Tesla accepted Bitcoin payments for its vehicles, only to make a u-turn on that decision just 2 months later.
     
  • Musk also wrote in a text message, uncovered during the legal battle engulfing the the Twitter takeover, that “blockchain Twitter isn’t possible”.

 

To be clear, there is a case to be made about expanding and strengthening Twitter’s links with the crypto world.

  • Blockchain could be used to verify Twitter profiles, to lessen the risk of bots and spam accounts.
     
  • Twitter’s existing crypto features, such as receiving tips in Bitcoin and Ether, could be expanded, especially if Musk acts on his purported admiration for China’s super-app, WeChat, which can handle payments as well.

 

Still, prudent market participants would have noted how quickly Dogecoin can plummet after a period of eye-watering gains.

Can latest Doge-mania outlive Fed meeting?

  • Dogecoin skyrocketed to an all-time high just shy of $0.74 back in May 2021, the day Musk hosted Saturday Night Live. It tumbled after he labelled the crypto as a “hustle” on air, and prices are still about 80% lower from that ATH at the time of writing.
     
  • Dogecoin climbed by nearly 40% on the day when Musk (initially) agreed to take over Twitter back in April, only to unwind all of those gains in the sessions after.

 

Hence, it’s apparent that Dogecoin’s price movements have been driven primarily by retail trader mania, with no apparent fundamental catalyst for this meme coin.

After all, this crypto was created as a joke back in 2013, coded within a few hours, although the periods of stunning gains (and declines) since have been very real.

 

However, also very real is this week’s Fed meeting, which is set to have major sway over risk assets in general, including cryptos.

Markets are fully expecting a fourth-consecutive 75-basis point hike by the US central bank.

On a more forward-looking note, markets are also hoping that the largest chunks of the ongoing Fed rate hikes are already behind us.

If the Fed opens the door for smaller-than75bps hikes over the coming months, and suggest that the peak for US interest rates are nigh, that could trigger a massive recovery for risk assets as a whole.

However, as we know, Dogecoin does march to the beat of its own drum, and an extension of its current parabolic rise, or even its immediate capitulation, cannot be ruled out.

 

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