The memecoin phenomenon didn’t prove as effective in the last month’s crypto market rally, as the gains of the top cryptocurrencies in this category barely outperformed Bitcoin. The monthly gain of Bitcoin (BTC) stood at 44.5%, while the top two meme-based coins, Dogecoin (DOGE) and Shiba Inu (SHIB), gained 27% and 40.7%, respectively.
Top meme-coins by total market capitalizations. Source: CoinMarketCap
Doge needs a market moving catalyst
Dogecoin is losing its popularity, as its most prominent supporter Elon Musk is reportedly developing an independent Twitter Coin instead of integrating his favorite cryptocurrency with the social media platform.
For the greater part of 2022, DOGE/USD performed poorly except for when Elon Musk acquired Twitter. The acquisition raised hopes in the Dogecoin community about increased cryptocurrency usage.
However, without any tangible announcements or reports from Twitter hinting at Dogecoin usage, the 100% price surge from October reversed in the following two months. The Google search volume for the token has also subsided since Q1 2022.
The NVT ratio for Dogecoin. Source: CoinmetricsGoogle trends score for “Dogecoin” and “Shiba Inu” Source: Google Trends
Another factor influencing the price of DOGE last year was the launch of Dogechain. An EVM-compatible blockchain that uses DOGE as the gas-paying token. However, Dogechain failed to gain user traction, becoming a place mainly for “shitcoin” trading. Currently, less than 1% of DOGE is bridged on Dogechain.
Lastly, the on-chain data for Dogecoin suggests that the price may be overpriced. The Network Value to Transaction Value (NVT) ratio metric is a price-to-earning ratio equivalent for the cryptocurrency markets. The metric measures the ratio of the market capitalization of the token against its transaction volume. Higher transaction volume compared to the market value corresponds to low NVT readings.
Coinmetrics’ historic NVT chart of Dogecoin suggests that the token could be overpriced. For the last eight years, the NFT ratio has oscillated between 10 and 100, with a few outliers during bull markets….