Dogecoin to the moon, Crypto ban in Turkey, and Bitcoin falls 10%
Dogecoin to the moon! The price of Dogecoin (DOGE) increased substantially in 7 days, from closing at 0.06129 USD per coin on Friday, 9 April,.
Dogecoin to the moon!
The price of Dogecoin (DOGE) increased substantially in 7 days, from closing at 0.06129 USD per coin on Friday, 9 April, to close at 0.3491 USD per coin on Friday, 16 April. DOGE’s all-time high was recorded at 45 US cents, according to one major crypto exchange.
Since then, the price fell by 26.6%, and found support at 0.24916 USD before moving on to a ‘gentle’ climb at 0.8% per hour. Please note that closing prices are recorded at the last hour of the day in the UTC+7 time zone.
Dogecoin didn’t appear on international news before its price blew up to 100% in 24 hours. Allegedly, tweets from SpaceX CEO Elon Musk about Dogecoin, as his ‘favorite’ coin, triggered the coin price’s skyrocketing move.
“Doge Barking at the Moon”, tweeted Musk on 15 April 2021, hours before the price of DOGE doubled.
This wasn’t the first time the tech billionaire showed his enthusiasm for the peculiar cryptocurrency. On 1 April 2021, Musk tweeted, “SpaceX is going to put a literal Dogecoin on the literal moon”, and caused a 30% increase in its value within an hour after the tweet went live.
His past tweets that mentioned DOGE have also triggered price surges as retail buyers jump onto the bandwagon, hoping for quick, large gains.
The phenomenon reminds us that not all cryptocurrencies are good investments. Some are easily the most volatile assets in history, bubbling overnight, and only to wipe out the accounts of some unlucky, but most importantly naive, investors.
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Crypto payments to be banned in Turkey
The Turkish central bank announced on Friday that they will ban the use of cryptocurrencies as payment for goods and services. This ban will take into effect on 30 April 2021.
The scope of this ban includes the “use crypto assets directly or indirectly in the provision of payment services and electronic money issuance, and payment and electronic money institutions to platforms that offer trading, custody, transfer or issuance services for crypto assets…”
Indirectly, the regulation in question would forbid even the purchase of cryptocurrencies, as many investors buy crypto assets from exchanges through fintech companies. As a result, the price of bitcoin slipped back to the 61,000s USD after reaching the all-time high two days prior.
Cryptocurrencies have become increasingly popular among the Turkish younger population in the past month to hedge against the sudden devaluation of their national currency. It also provided them a new opportunity to invest with a lower capital, as previously the only investment options were in real estate and the gold rush.
Turkish President Recep Tayyip Erdogan had replaced the central bank governor Naci Agbal on 22 March, which caused a 15% plunge of the lira. However, the lira has seen a loss in half of its value since the country’s monetary crisis in 2018.
With the official unemployment rates hitting 13.4%, the opposition party criticised the “midnight move against cryptocurrencies”. As hasty as the decision may seem, there was an uneasy red flag when the conservative government had previously tweeted to “closely monitor” the state of crypto and its developments back in March.
A few countries have proposed a ban on the use of cryptocurrencies which troubled the fintech and trading industry, including India and China. However, each country’s regulatory ecosystem is complex. Bitcoin mining rigs, for example, are still operational in China and are responsible for 75% of transaction validations.
It is important to remember that while cryptocurrencies are decentralised, people still rely on exchanges and vendors to accept cryptos so that their intangible value is realised in the form of goods and services.
Bitcoin plummeted down to 10%, explanations are still unclear
On Sunday morning during the Asian hours, bitcoin price fell by 6% in 2 hours after failing to retrace at 60,000 USD. The fall continued throughout the day, reaching a new 1-month low, closing at 54,104 USD at 11:00 UTC.
The sell-off had caused the price to reach as low $51,120, and leading to the development of hypotheses in an attempt to explain why this occurred. Some believed it was due to a power outage in China’s bitcoin mining hub, while others believed it was due to circulating misinformation about the U.S. Treasury to make a crypto crackdown on financial institutions.
From a technical perspective, the crash may not seem out of the ordinary. Last weekend, bitcoin and altcoin prices soared as the retail investors joined the market at the climax of the bullish run due to the Coinbase listing on Wall Street.
Within hours, the price of Dogecoin (DOGE) inflated to more than 500%. Community hype and rookie investors seeking quick gains drove the coin’s price up to create a miniature bubble. Once enough people sell (and they usually do once the first sign of a downward price movement occurs), this causes a domino effect in which massive sellouts will occur.
This has happened with coins that have no fundamental value such as Dogecoin, which really started out as a parody coin to mock bitcoin. News and tweets from celebrities can explode its price, like sparks to a pool of petrol.
However, the power of the news cannot be disregarded. An unconfirmed rumour that has been circulating on Twitter and Reddit suggests that the US Treasury is planning to crackdown financial institutions for money laundering using cryptocurrencies.
There has yet been any official statement released in this regard. Many holders regard this as a “weak FUD” — FUD stands for ‘Fear, Uncertainty, and Doubt’. The rumour also seemed to have been divorced from reality, as many financial institutions have enjoyed the benefits of regulatory approval, and are already earning greater trust with the government, even in spite of Ripple Labs’ lawsuit.
However, for bitcoin, fundamental explanations should exist, not just rumors and speculation. A blackout in the Xinjiang region in China may be a more solid explanation.
According to Coinmarketcap, the blackout had caused a large chunk of computational power in the Bitcoin network to be temporarily lost for 48 hours. This is reflected by the drop in hash rate, which is also an indicator of the network’s health.
The drop was significant because Xinjiang powers almost half of the bitcoin network. While decentralised, bitcoin’s mining is almost centralised and limited to specific geographical regions, as discussed in one of our guides to proof of stake.
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Disclaimer: This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.
Last updated November 23, 2021