Copycat Trades Save Dogecoin (DOGE) From Dangerous Declines

Copycat Trades Save Dogecoin From Dangerous Declines

Yerevan (CoinChapter.com) — Traders of Dogecoin (DOGE), copying the behavior of Bitcoin investors, who decided to buy the token at its low point, similarly put their money back into DOGE, buying at the low, to gain maximal profit after the upcoming possible ascend.

DOGE, the famous meme-coin, experienced a 69% decline after DogeDay on April 20, when the token hit $0.432. It crashed massively on Friday and reached its weekly low of $0.136. Despite the fall, DOGE appears to be on a new leg up as traders started buying the meme-token at the lowest price, anticipating another bullish period.

Doge is recovering after a 69% crash. Source: [DOGEUSD] on TradingView.com

Copying BTC and ETH?

Independent though it may seem, DOGE traders appear to be following in the footsteps of flagship cryptocurrency traders. It is easy enough to spot the similarity in the investors’ behaviors on the daily charts.

Both Bitcoin (BTC) and Ether (ETH) suffered losses during the early European session on Friday, with their prices at weekly lows: $47,157 for BTC and $2,120 for ETH. However, the noted top-ranking tokens started to recover later in the day, thanks to the investors seeking to buy them cheaply. The rise in demand subsequently led to the ascend in value. The DOGE price followed suit.

In a recent interview with MarketWatch, Miller Tabak & Co. Chief Market Strategist Matt Maley voiced his opinion on what is in store for BTC this week. He noted that weekend trading was “very thin” and has historically not been a great indicator of how bitcoin will trade the following week. For now, it is not clear if the traders should expect the bull or the bear. But 4h charts do indicate comparable tendencies.

BTC recovering thanks to the traders rushing to buy at the low. Source: [BTCUSD] on TradingView.com

Similar to Bitcoin, Ether is rising after a crash week. Source: [ETHUSD] on Tradingview.com

It is easy enough to spot the similarities between the three charts. It so appears that DOGE supporters are “copycat trading,” mimicking the moves of BTC and ETH investors. Copycat trading is anything but new, especially for inexperienced traders who seek to find ready solutions rather than conduct their own research. But this trading behavior is typical of highly volatile cryptocurrencies.

Is DOGE a risky investment?

While all cryptocurrencies are prone to volatility, some are feature higher volatility than others. Flagship currencies like Bitcoin and Ether are much more stable, due to their solid algorithmic foundations and substantial investments from the mainstream economy. In the cryptocurrency market, they are considered a low-risk investment.

Dogecoin, on the other, has no solid use case. Despite the considerable market cap of $30 billion, it is maintained mostly by the army of online supporters. Having a high dependency on the Twitter hype, it is extremely volatile and makes a risky investment. Even in the short-term.

Photo by Anna Tremewan on Unsplash