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Over the past few months, the situation on the cryptocurrency market has been actively changing. Due to the problems of bitcoin and the beginning of the altcoin season, there is a redistribution of market shares. One of the main winners in this situation was the Dogecoin meme coin. In less than a month in May, the cryptocurrency has risen in price by 373% and burst into the top 5 crypto assets in terms of capitalization.
However, such a demand for an asset harms the market and does not correspond to the real state of affairs at all. The main mouthpiece of Dogecoin was Elon Musk, who went beyond Twitter and promoted cryptocurrency even on the US show SNL. It is thanks to the activity of the billionaire that the coin-meme shows an abrupt growth. On May 8, when Musk announced his participation in SNL, the cryptocurrency renewed its all-time high, rose in price by 23% per day, and reached $0.73. In addition, the huge growth of the coin started due to the altcoin season and its impact on weaker market participants. Cryptocurrencies such as ETH, XRP, and LTC are helping to strengthen the position of smaller altcoins. It is worth noting that Dogecoin began to gain a wider audience, which also affected the growth of the asset's quotes. For example, the US baseball team has started selling tickets to Dogecoin games.
At the same time, the coin-meme remains the most risky asset, which instills fears in the majority of the market audience. The fact is that Dogecoin set the trend for the development of extremely volatile and highly speculative assets, like Shiba. The main danger of these coins lies in their excessive volatility: Doge is able to gain 25% of its capitalization in a few hours after Elon Musk's tweet. For assets that are in the top 10 or top 5 cryptocurrencies in terms of capitalization, this is a very dangerous signal that can negatively affect the general market sentiment. This is due to the fact that, with an impressive capitalization, altcoins can fall in price as sharply as they gained their mass.
This negatively affects the overall market position and can cause a sharp and deep correction, aggravated by bears. In the worst-case scenario, such jumps in the value of frivolous assets can widely reverse the current trend and cause depression. The high demand for speculative cryptocurrencies among retailers heightens institutional doubts about their willingness to enter the market. That is why the main cryptocurrencies (LTC, XRP, BTC) are more like stablecoins and fluctuate in narrow ranges, which is also caused by the excessive alertness of the market.
Considering all of the above, the market is in a wait-and-see position. For a long time, the crypto market has lacked a powerful impulse that would allow large companies to cast aside doubts, and the main cryptocurrencies to overcome psychological boundaries. As of May 12, such announcements are not expected, and market participants are increasingly inclined to believe that the next cycle of growth of the cryptocurrency market, provoked by ETH, is coming to an end.
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