Dogecoin's Bitcoin-Beating Bounce May Be Bad News for the Market

 Dogecoin's Bitcoin-Beating Bounce May Be Bad News for the Market

Despite the increased credit risk posed by major industry players in the wake of FTX's collapse, bitcoin (BTC) and the wider crypto market appear to have stabilized. However, there is still one factor that suggests the downtrend is not over.

Dogecoin (DOGE), a meme cryptocurrency, has gained 40% in the past 10 days, outpacing bitcoin's 8% rise and Ethereum's 18% gain. According to CoinDesk data, the total market capitalization has increased by 10% to $808 billion.

The difference is significant because, in the past, large gains in DOGE and other meme coins like shiba inu (SHIB) have been indicative of a market sell-off.

In a market insights note, blockchain analytics firm Santiment stated, "Every time that [the] price of DOGE starts rising rapidly, there's a market-wide crash following just moments later. "We are currently observing such a rise. The question now is whether this time is different.

Over the past year, price spikes in DOGE have consistently indicated declines in BTC (Santiment). 

The chart shows that rallies in DOGE, which began as a joke in 2013, have evolved into contrarian indicators, prompting investors to reduce their bullish positions in bitcoin and other cryptocurrencies.

The most notable example would be the rise of DOGE in the latter part of October, which served as a prelude to bitcoin's FTX-induced fall to 24-month lows in the middle of November.