Due to the sudden and sharp increase in price of Bitcoin, investors are once again taking risks in the cryptocurrency market and investing heavily in joke cryptocurrencies such as dogecoin (DOGE).According to TradingView-tracked data, DOGE, the most popular cryptocurrency worldwide, has increased in value by more than 10% in the last day, trading above $0.10 for the first time since April.The price has increased by 27% in the last seven days, seemingly in line with the rise of bitcoin from $38,000 to $44,000.
According to analytics source CoinGlass, the notional open interest—the dollar amount locked in the number of active futures and perpetual futures contracts—tied to DOGE has increased by 58% to $625 million in just one week, hitting a level not seen since Nov. 2, 2022.It is believed that rise and a growing price support the uptrend.Velo Data data reveal that funding rates on a number of exchanges have increased to an annualized 50% or higher, suggesting a significant premium in perpetual futures over spot prices.Positive rates represent the general optimism among investors that prices will likely rise and show a preference for long, or bullish, bets.
Joke cryptocurrencies are high-beta investments that have a tendency to move more or less in the same direction as bitcoin.Stated differently, they act like leveraged bets on the biggest cryptocurrency.Because DOGE’s excessive positive activity in relation to bitcoin is a sign of speculative froth, which is frequently seen near the end of a market-wide bullish trend, investors should be cautious.
With the DOGE/BTC ratio still at bear market lows, DOGE’s most recent increase, while spectacular, isn’t necessarily an indication of excessive greed.This ratio quickly spiked, predicting both the market-wide panic brought on by FTX in November 2022 and Bitcoin’s peak above $60,000 in April 2021.