Article structure notification: the article is divided in three sections. First section is focused on short-term, technical and speculative analysis of the project – this is regularly updated part of the article. Second section is focused on general market and sentiment analysis and third section is focused on the long-term, fundamental analysis and future prediction of the project – this is occasionally updated part of the article.
Mid May Update: Technicals
Price is in a trendless ranging environment, a very important
status that needs to be established before doing any TA (on any chart).
The average directional index (ADX) is used to determine when the price is trending strongly. In many cases, it is the ultimate trend indicator. ADX is plotted as a single line with values ranging from a low of zero to a high of 100. On the scale from 0 to 20 – trend is absent or weak. From 20-50, it is considered a strong trend. Everything above 50 is very or extremely strong trend. Doge currently has ADX value of 17, which translates into absent or very weak trend.
The 4h timeframe portrays a huge struggle of Dogecoin bulls to break out of the 34-46 sats channel. DOGE clearly bottomed out at 34 sats after forming a quadruple bottom before shifting gears and heading back up. It then failed created a new local high at 44 sats before dropping back below 40 sats again. It is now forming a new bottom at 37 sats and new resistance at 39 sats, ranging in this mini channel for the last 5 days and trying to pick up some volume in another attempt of breaking the 46 satoshis.
As long it is stuck in this range of 34-46 sats, DOGE makes sense to trade only for the short-term, intraday swing traders.
If it fails to hold this 37 sats, another leg lower to the 34 sats support is on the cards.
All moving averages are above the price action in the bearish setup, so DOGE needs to burst through them before a real bull initiation is proclaimed. The other thing we need now for the Dogecoin rocket to launch is bitcoin to go sideways, at least for couple of days.
One thing to bear in mind is the turbulent and erratic nature of bitcoin – a sudden thrust up or slide down is always on the cards which would invalidate this and all other analysis and predictions. In such cases, market is shaken up with most traders exiting altcoins and entering bitcoin positions or seeking shelter in stablecoins, especially in the initial phases of bitcoin pumps and dumps. So it is always a good idea to keep a close eye on bitcoin’s behaviour before opening a long or a short on any other coin in the market.
Should this happen, stop by again to check out our updated charts and thoughts.
Trading volume is worrisome – reported volume in the last 24hrs is $33m and “Real 10” (trading volume on the exchanges that provably prevent wash trading) volume is almost non-existent and amounts to only $330k since DOGE is not listed on many legit exchanges. This means that DOGE’s liquidity is highly inflated and has very low liquidity. As you evaluate investments, and consider your overall portfolio, liquidity should be an important factor. Basically, liquidity is the ability you have to convert any asset into other coin or fiat quickly. It is also an ability to buy or sell a security without affecting the asset’s price.
On the other side, DOGE comparatively has a solid buy support, according to coinmarketbook.cc. Buy support is measuring sum of buy orders at 10% distance from the highest bid price. This way we can eliminate fake buy walls and whale manipulation and see the real interest of the market in a certain coin. DOGE currently has a sound $2.4m of buy orders measured with this method, which sets DOGE buy support/market cap ratio at 0.80%, an above average value. Bitcoin and Ethereum have a 0.27% and 0.28% ratios, respectively. This novel metric indicates there are a lot of manipulations, inflated liquidity and fake orders on all crypto trading pairs, including DOGE pairs.
Mid May Update: Fundamentals
To assess fundamental health of a project, we used the FCAS metric. FCAS is a comparative metric whose score is derived from the interactivity between primary project lifecycle fundamentals: User Activity, Developer Behavior, and Market Maturity.
There are a few sub components which provide data to each fundamental:
User Activity is comprised of Project Utilization and Network Activity
Developer Behavior is comprised of Code Changes, Code Improvement and Community Involvement
Market Maturity is comprised of Liquidity and Market Risk. Market Maturity has less than 5% impact on a project’s overall FCAS.
FCAS ratings are on a 0-1000 point scale with a corresponding letter grade. Break points are based on standard deviations in the underlying component distributions.
900 – 1000 is marked as S for superb. 750 – 899 is marked as A for attractive. 650 – 749 is marked as B for basic. 500 – 649 is marked as C for caution. And finally, below 500 is marked as fragile. You can read more about it here.
Dogecoin has been ranked as the B category – basic with overall 701 points as of May 5th. By far the strongest metric that contributed to this great score is user activity that got 924 points, followed by market maturity with 644 and developer activity that had only 539 points. This data indicates that Dogecoin is actively used as is right now but the improvements and new developments on the network are not being worked on which is not a good sign.
Below are some of the most important news
around the project in the last 30 days.
- Aside of Elon Musk joking on Twitter about being a CEO of Dogecoin, nothing worth jotting down happened in Doge ecosystem in the last month or so.
Below is our long-term forecast where we cover general market movements and sentiment shifts before delving deeper into the specific predictions for Dogecoin.
General Market Movements and Sentiment Shift
The downfall of altcoins that were mainstream media darlings at the start of the year, DOGE among them, can be attributed, in part, to novice investors getting scared off once the bear market kicked in with a vengeance. Every resurgence of bitcoin in recent period, was met with the, for the most part, inability of altcoins to rally with it. Reason for that can be rookie investors learning from their mistakes, while smart money that was previously watching from the sidelines has begun to enter into bitcoin.
These entities weren’t about to buy BTC when it was trading at an all-time high, but they’ll take a look now, having missed the boat the first time around. None of them, it seems, are interested in altcoins however, despite the fact that many are trading at a 5x discount. Institutional investors may be cautious, but they’re not foolish.
Some altcoins will continue to have some speculative value for the foreseeable future. But just like the now infamous tulips, the hysteria will eventually subside. We are already witnessing the first phases of that slide and even though most of the bag holders react emotionally to articles that criticize their coins, I am just observing the developments on the market. You better start emotionally detaching yourself from your “great sounding” coin because if goes nowhere, ideas are worthless without execution and real users that see value in the project.
How to evaluate fundamentals of a crypto project
We should consider crypto valuations like educated gambling, a ‘prediction market’ where we are betting on the odds of project and token success. There are some catalysts of success we can identify:
- Project success drivers (user traction, strong financial bottomline, good treasury management, network effects/synergies between users and token investors)
Real user traction is the most important driver of success, that is what most of holders call “adoption”. If people start using certain crypto project because they find it useful and it makes their life easier, that is a guarantee of success. So far, almost no crypto project can claim to have done so.
Strong financial warchest that will enable teams behind the project to develop their visions, incentivize other developers to join them and start using their product is also a crucial aspect of any project. Tied into it is treasury management – especially for the project that had big ICO proceeds. Temptation to squander all those millions into “conferences and events” (read hard-core partying on yachts and luxury hotels) was massive, especially if we consider that majority of token projects founders were no-names and ordinary employees that worked for a paycheck before the ICO fairy-tale happened to them.
Another adoption indicator – network effects, where every additional user of a good or service adds to the value of that product to others. When a network effect is present, the value of a product or service increases according to the number of others using it.
If you can objectively notice that your favorite token project has some of these traits happening for it, be happy – you might have found a winner.
- Token success drivers (favourable demand-supply dynamics, programmable incentives on token, aligned incentives with management team and consensus on token as common unit of value creation).
Token success is completely dependent on tokenomics. As defined by infloat.co, tokenomics involves the incentivization of certain stakeholders to ensure particular behavior.
So, tokenomics is essentially an incentive structure designed to ensure that a token has a purpose and utility within its native network. It is the study of how coins/tokens work within the broader ecosystem that can be considered as a sovereign micro-economy. This includes such things like token distribution as well as how they can be used to incentivize positive behaviour in the network.
For example, bitcoin is designed to ensure that bitcoin miners have a reason to mine new bitcoin. Miners validate bitcoin transactions and receive (or create) newly minted bitcoin in the process.
On the other hand, individuals, businesses and other bitcoin users pay a transaction fee for miners to include their transaction in the next block. This ensures that even when all bitcoin have been minted (to the tune of 21 million, which should happen in around 2140), bitcoin miners are still incentivized to keep ‘mining’ (i.e. validating transactions).
To paraphrase all of the above in the simplest terms: if you, after weeks of research and reading, can’t figure out why the project needs to have a token, it probably doesn’t.
So why does the token exist then?
– To make the project founders rich.
But there are some people on Twitter, Reddit, Telegram claiming otherwise.
-Yes, they are either: paid to do so by those same founders, they are desperate and delusional bad holders or they are just stroking their own ego with newly learned fancy economic terms and jargon.
Needless to say – stay clear of such projects.
Our DOGE Price Prediction for 2019
Dogecoin, as the rest of the market, is tied at the hip of bitcoin’s price action. If bitcoin embarks on another bull run, Dogecoin can hope for one as well. Since that is very unlikely, don’t expect much to change for Dogecoin price-wise in this year. So 2019 will be a year of boring sideways action with minor bitcoin ignited jumps and slumps.
The main currency in cryptocurrency markets is Bitcoin and given this, altcoins tend to fuel Bitcoin runs and Bitcoin tends to do the same in return. Given this relationship, Bitcoin price movements (or lack thereof) tend to effect altcoin prices.
When Bitcoin goes up swiftly, it will likely:
- Suppress or depress altcoins as money flows into Bitcoin;
- Or, take altcoins along for the ride
In cases when Bitcoin plunges, it will likely:
- Depress altcoins as money flows into fiat;
- Or, cause altcoins to boom as money flows into them, but this is rarely the case.
When Bitcoin moves sideways, it will likely:
- Cause altcoins to mimic that as traders wait for a clear sign on the direction of the market;
- Or, cause altcoins to flourish as traders look for returns in altcoins and try to get favorable trades in terms of BTC pairs.
To summarize, Bitcoin is the focal point of the crypto market in many ways, and with BTC trading pairs on every exchange, the gravity of Bitcoin is hard to evade.
DOGE-BTC Price Correlation
The vast majority of trading that occurs in the crypto markets are between BTC and altcoin trading pairs. Since most altcoins do not pair with fiat currencies (and only a few are paired with stable coins like USTD), Bitcoin is the next best option. Therefore, when Bitcoin is stable, it forms as the ideal base currency for buying altcoins (which is why altcoins tend to do well when Bitcoin goes sideways).
Correlation is measured on a scale from -1 to 1. Values above 0 shows the degree to which altcoin is moving in the same direction as BTC prices (either up or down in tandem), and values below 0 shows the degree to which altcoin moves in the opposite direction of BTC prices (so when BTC goes down, altcoin goes up, or vice versa). Values around 0 shows that when BTC price moves, altcoins stays steady, or alternatively that when altcoin moves up or down that the BTC price is staying steady.
Based on the correlation analysis, BTC and DOGE have a strong positive relationship. The correlation coefficient of their prices is 0.44, which was calculated based on the previous 100-days’ price dynamics of both currencies.
The majority of projects will fail — some startups are created just to gather funds and disappear, some would not handle the competition, but most are just ideas that look good on paper, but in reality, are useless for the market.
Vitalik Buterin, co-founder of Ethereum said:
“There are some good ideas, there are a lot of very bad ideas, and there are a lot of very, very bad ideas, and quite a few scams as well”
Dogecoin Future Outlook
As a result, over 95% of successful ICOs and cryptocurrency projects will fail and their investors will lose money. The other 5% of projects will become the new Apple, Google or Alibaba in the cryptoindustry. Will DOGE be among those 5%?
If we are honest, there is not much going on for Doge aside of this welcoming and ardent community. It is unreasonable to expect a long-term Dogecoin survival if that is the only hinge for the project.
Why will Dogecoin succeed?
Why will Dogecoin fail?
Will Dogecoin ever reach $1?
Is Doge dead?
All of this summed up means one thing: Dogecoin might live through couple of orchestrated and, for a regular trader, completely unpredictable pumps but the majority of time will be murky sideways trading with small volume and no significant interest from the market.
Price will heavily depend on what BTC will do and since many analysts think BTC will not be making big moves in this year, it is hard to expect DOGE will do them either. The price will probably stagnate and record slow-moving depreciation or appreciation depending on the team activity, potential technological breakthrough or high-level partnership.
Dogecoin can’t be killed
Ever since its founder Jackon Palmer departed the community in 2015, the development has waned and prophecies about imminent Dogecoin death started floating around. However, as one of the Doge developers told CoinDesk back in 2017, it is pretty hard to “kill a cryptocurrency”.
“Cryptocurrencies are “a bit zombie-like”, Nicoll said. “It’s very, very hard to kill a cryptocurrency.”
Some might call a valueless cryptocurrency ‘dead’, but that would be missing any educational or entertainment value the token might provide. For instance, Nicoll said even after the 2014 fork, shibes were moving the old version of the coin around for about five or six months.
“It was a functional currency, but you couldn’t use it at shops or on exchanges. We don’t know why they were doing it, but they were having a whale of a time,” he said.
But how do you really kill it? The proverbial headshot for a ‘zombie coin’, according to Nicoll, would require removing the original code from GitHub, making it exceedingly hard to recreate it since very few people keep copies of source code material. Yet the nature of open-source software means that, in that rare instance, copies of the code could still be floating out there somewhere on the internet.”
The bright side
Dogecoin was originally created as a joke, referencing a meme about a funny-looking Shiba Inu dog that gained wide popularity on the internet.
Doge is already being used by places that accept crypto like Bittrefill, som small businesses use Doge too
Doge is one of the most active chains, it’s even arguably the most active chain when you divide the market cap by transaction activity –https://bitinfocharts.com/
Among top altcoins it has the best average active addresses for the past three months https://bitinfocharts.com/comparison/activeaddresses-xrp-bch-etc-zec-dash-xmr-btg-doge.html#3m
Doge is already ahead of the curve and is functional as it is, so an often outcry for ostensible lack of development is not grounded in solid logic. Why change a winning team? The protocol is working, developers deploy minor tweaks as necessary to keep the train running, community is using it with no issues so the so much sought development is inessential. There is also a false comparison made by some crypto fans – fixing a broken protocol is a must if you want to survive (looking at you Ethereum), changing a working protocol is not only non-essential but also uninvited. The discrepancy in development activity is a logical consequence of such state of affairs.
Since its creation, the cryptocurrency’s popularity and value has achieved stratospheric heights. A passionate online community has developed over the years with many loyal supporters of the coin. The community has done some incredible things with Dogecoin, from utilizing the cryptocurrency to raise fundsfor the Jamaican bobsled team to go to the Sochi Winter Olympics to funding a project to build a well in rural Kenya to provide access to drinking water.
In the sidebar of their subreddit there is a list of charity events in which community takes part.
It has the ongoing DogecoinSocksForTheHomeless Which has been ongoing for well over a year now. Dogecoin Folding The longest ongoing charity related thing for Dogecoin. There is also DogePizza which is more sporadic than the previous two.
Common misconception about the lack of development
One of the core devs tackled this misleading information that tends to spread around in crypto press (we also falsely reported about lack of development on Dogecoin Core client in one occasion):
“Actually I can, and I can back it up factually.
Dogecoin 1.10 release 11/10/2015
Dogecoin 1.10 recent changes Master branch changes – 1/21/2018
Dogecoin 1.10.1 release 4/24/2016
1.10 has only been out barely 3 years, it turned 3 on the 10th of this month.
1.14 has been out in public testing since 2/4/2018 1.14 public Alpha
1.14 is also into beta testing now 1.14 Beta 11/16/2018
I understand math is a hard thing, however given that many assets in the space have a developmental standard which Dogecoin does (this is an actual programming, and coding standard for public released programs and software that is generally space wide) Using a website that tracks only the primary branch, ignoring ongoing work is a flaw. Especially as some assets in the crypto space not only do not do work on their master branches, but will direct users and use their active branches as the developmental launch platform post release instead of migrating it to the master branch to retain transparency in relation to the codebase in full from launch.”
Use cases emerging
Biggest ace in the sleeve for Doge future is its current most frequent application as a tipping currency. With websites like Litebit, Anycoin, Suchlist, keys4coins, dogegifts, clockworkcrypto and an official Reddit tip bot (there is talk of a Telegram tip bot as well), more and more ways of spending your DOGE are popping up by the day.
Dogecoin is very much in line with the United States’ “tip culture”, and with the rise of reward culture on the Internet in the world, Dogecoin will also be widely used. Compared to expensive Bitcoin, the threshold for Dogecoin is even lower, and it’s much cuter. Dogecoin could become the most popular “tip cryptocurrency” in the U.S. Internet.
Despite the bear beating the Doge during this extended period of crypto slaughter, 1 Doge is still worth 1 Doge and much wow is not going anywhere!
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CaptainAltcoin’s writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner.
The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com