Last week, Dogecoin exploded with an 800% intraday move. On-chain data looking closely at daily active addresses, however, suggests that the pump and dump was almost entirely driven by Robinhood buyers.
Here’s what this means for both sides of the coin.
Dogecoin Reignites Retail Interest in Crypto After 800% Rally
Dogecoin’s recent rally lived up to its “much wow” catchphrase, climbing 800% from under a penny to more than 6 cents per token.
Dogecoin became the target of a group of organized buyers after shares of GameStop and other stocks were restricted from trading last week. With those stocks unable to trade, the trend turned toward cryptocurrencies.
Related Reading | Altcoin Season Is Here: “Buy Crypto” Surpases Bitcoin Searches On Google
The meme-based altcoin was an easy choice for the organizers who range from Redditors to Tik Tok content creators, mostly because of its low price and adorable pup logo.
Doge pumped over 800% in a single day | Source: DOGEUSD on CoinPrice.Watch
Fundamentally Flawed: Why Buying Altcoins On Robinhood Is The Wrong Idea
Even though investors piled into Dogecoin en masse, pumping its price, daily active addresses failed to set a new high, according to CoinMetrics.
This data suggests that the pump was driven primarily by Robinhood investors, as new users on proper crypto platforms would have resulted in new address creation.
Daily active addresses climbed but failed to set a new high | Source: CoinMetrics on Twitter
Robinhood gained popularity over the last several years by offering retail investors quick and easy exposure of top traded company shares through a sleek user interface.
The platform introduced cryptocurrencies in 2018, but Robinhood doesn’t work the same way as most cryptocurrency exchanges. Any cryptocurrencies bought on Robinhood cannot be moved to and from the platform, meaning users don’t actually own the crypto.
On-chain data shows a lack of a corresponding spike of new addresses that matches the growth in price. The lack of fundamental growth in the meme-coin likely means that any price increase from organized pumps won’t be sustainable. However, the rally was enough potentially to ignite altcoin season in the crypto space.
Related Reading | Robinhood Reminder: Not Your Keys, Not Your Bitcoin
Dogecoin in the past has been used successfully as a barometer of sentiment in altcoins, and its emergence is a sign to take positions in coins with more utility and value.
Coinciding with all of this, Google searches for “buy crypto” have begun to outweigh “buy Bitcoin.” Those who do end up buying more crypto due to the allure of Dogecoin-like gains, should do so from a platform that allows you to self-custody the assets such as Coinbase.
Featured image from Deposit Photos, Charts from CoinPrice.Watch