- Despite Fundamental Differences, Bitcoin and Dogecoin Have a Strong Correlation
- The short-term trajectory points to an increase in the price of DOGE and a decrease in BTC.
Few cryptocurrencies have survived a decade of existence. And yet, Bitcoin (BTC) and Dogecoin (DOGE) have been on the market for over 10 years, yet few know the difference between them.
In this article, AMBCrypto will take a detailed look at the similarities and differences between Bitcoin and Dogecoin. You will also learn about their respective price actions and network conditions.
Bitcoin vs Dogecoin: Who will take the crown?
Bitcoin and Dogecoin have several things in common. The most notable is that both use the Proof-of-Work (PoW) consensus mechanism.
It is because of these similarities that blockchains are among the best projects that still stick to mining rather than using validators. However, the main difference between them is their offering.
While Dogecoin has an unlimited supply, Bitcoin has a maximum supply of 21 million coins, making it a scarcer crypto asset than DOGE. At press time, DOGE was changing hands at $0.12.
This represents an increase of 38.19% year-on-year (YTD). As for Bitcoin, its value stood at $61,579, representing an increase of 39.42% over the same period.
When we evaluated the prices of both cryptocurrencies, we noticed a strong correlation. For example, according to Macroaxis, the correlation between Bitcoin and Dogecoin was 0.98.
Source: Macroaxis
Correlation coefficient values range from -1 to +1. When the value is close to -1, it means prices are diverging and rarely moving together.
However, a coefficient close to +1 implies the opposite. Thus, the correlation between BTC and DOGE showed that if you had invested some money in both coins since the beginning of the year, you would have received almost the same profit.
However, the yield on Bitcoin will be a little higher. So the question is: will prices continue to move in the same direction? Let’s see.
DOGE is in the lead this time
To determine this possibility, AMBCrypto analyzed the inflow and outflow price (IOMAP). This indicator, provided by IntoTheBlock, determines support and resistance levels.
To do this, it groups addresses purchased in a certain price range. Some of them will bring profit, while others will bring losses. Typically, the larger the group of directions, the stronger the support or resistance it provides.
At the time of publication, AMBCrypto found that a selling wall had appeared at $62,134. So far, 1.64 million addresses have purchased 759,670 BTC. On the other hand, 755,240 addresses bought 445,280 BTC at a price of about $60,793.
Source: IntoTheBlock
Given the difference, Bitcoin is likely to face another decline. If so, the coin risks falling below $60,000. Thus, now may not be the best time to buy BTC.
For Dogecoin, it was a completely different scenario. Unlike Bitcoin, DOGE’s support was $0.12. This is because 86,480 addresses purchased 6.87 billion DOGE at that price.
These are more than 33,520 addresses where 717.77 million coins were purchased at a higher value. Due to this condition, DOGE can trade at a higher price in the short term.
Source: IntoTheBlock
Realistic or not, here is the market cap of DOGE in BTC.
Additionally, the possible target for Dogecoin is between $0.13 and $0.15. Simply put, Memcoin may offer better performance than Bitcoin in the short term.
This is an automatic translation of our English version.