Dogecoin, the first meme coin, has repeatedly shown its ability to experience explosive price movements, often coinciding with spikes in trading volume.
Historical data reveals that every time Dogecoin (DOGE) sees a price surge, there is an increase in volume that accompanies it. Therefore, understanding the relationship between volume and price could help by projecting what will happen if DOGE reaches a daily volume of $50 billion.
Historical Context Between DOGE Volume and Price
Dogecoin reached its all-time high above $0.73 in May 2021, fueled by an increase in daily trading volume, which peaked at around $46 billion, according to market data from CoinMarketCap.
This massive rise was influenced by retail enthusiasm, celebrity support like Elon Musk’s tweets, and market euphoria. At its peak, Dogecoin’s market capitalization exceeded $98 billion, making it one of the best crypto assets in terms of valuation. at the time.
However, as DOGE fell from the high of $0.73, investor participation declined, leading to an equal decline in trading volume. As of late, Dogecoin’s 24-hour volume averaged $3.5 billion.
Nonetheless, this figure has increased significantly amid the latest election-induced price increase. For context, Dogecoin enriched 177%, from $0.1582 on November 5 to a three-year high of $0.4385 on November 12. During this period, volume exceeded $19 billion and notably reached a peak of $39.9 billion on November 12.
Potential Dogecoin price at $50 billion volume
Currently, Dogecoin is trading at around $0.3945 with a 24-hour volume of $8.7 billion. This East on the other hand has its 2021 highs, confirming the important role of volume in the bullish dynamic.
When trade volume When spikes occur, this usually means increased interest and liquidity, which can amplify price movements, especially in speculative assets like DOGE.
The relationship between trading volume and price is not simple, as price is determined by supply and demand. However, we can make a simplified estimate based on the proportional increase in trading volume and assume that higher volume leads to higher prices due to increased demand.
Using this as a benchmark, if trading volume increases to $50 billion per day and we assume proportionality, the price of Dogecoin could reach around $1.23 per coin.
The price of $1.23 would imply a new market capitalization of around $212 billion, which would place Dogecoin among the most valuable cryptocurrencies. This would require significant and sustained interest and investment.
However, this would depend on several factors. The first is a increase in demand. Notably, higher trading volume often translates into increasing demand. With $50 billion in daily activity, massive capital inflows could raise pricesespecially if new buyers enter the market.
However, the second factor is speculative dynamics. Crypto assets thrive on speculation and Dogecoin, as a meme token, benefits from social media buzz and community hype. Increased volumes could attract traders looking to take advantage of short-term price surges.
Additionally, greater liquidity due to high volume can lead to sharper price movements, particularly if large trades take place. If most of the volume is buy orders, the upward pressure on the DOGE price would be substantial.
DisClamier: This content is informational and should not be considered financial advice. The opinions expressed in this article may include the personal opinions of the author and do not reflect the opinions of The Crypto Basic. Readers are encouraged to conduct thorough research before making any investment decisions. Crypto Basic is not responsible for any financial losses.