Bitcoin and Dogecoin have some interesting traits that highlight their similarities, including their price action. For starters, both are pioneers in their respective segments, with BTC as the first cryptocurrency and DOGE as the first memecoin.
Both Dogecoin and Bitcoin have also demonstrated similarities in terms of price action. The observed correlation over the last few months was mostly because DOGE has been mimicking BTC’s price movements.
Prices of the two assets did not necessarily move in tandem consistently but peaks and troughs were similar for the most part.
For example, Bitcoin achieved a new ATH this month, but DOGE has not retested its 2021 highs.
Nevertheless, DOGE traders who invested in the memecoin based on Bitcoin price movements achieved considerable success.
Institutions and Whale Activity are the Common Denominator For Bitcoin And Dogecoin Price
Institutions have been at the forefront of Bitcoin price action through ETFs since their approval earlier this year. Meanwhile, Dogecoin whales have also mimicked the ETF inflows and outflows.
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Speaking of whale activity, recent reports revealed that they acquired more than a quarter of a billion DOGE tokens during the latest dip.
Unsurprisingly, Bitcoin also experienced a surge in accumulation recently as price dipped below $95,000.
The sharp uptick which saw it push back over $99,000 at the time of writing was characterized by robust whale activity.
According to IntoTheBlock data, large holder flows surged from 1,490 BTC on 19 December to 15,260 BTC the next day. A spike in large holder outflows was observed during the same period.
Outflows remained lower at 12,820 BTC as of 20 December, confirming more buying pressure than sell pressure.
However, ETF data remained negative on Thursday and Friday for the first time since the start of December.
But what’s next for Bitcoin and Dogecoin as 2025 rolls in? Some analysts believe that the recent sharp pullback is a classic tell-tale sign that we are headed for more volatility ahead.
Massive drawdowns may take place as BTC continues pushing to new highs. However, that may not necessarily be the outcome in the 2025 bull run.
A recent Glassnode analysis highlighted that the 2024 bull market has so far experienced limited downside.
Factors Impacting Pullbacks And Bullish Sentiment
This is unlike past bull markets where the cryptocurrency experienced massive drawdowns.
According to the analysis, escalating institutional interest and strong Bitcoin ETF demand are the reasons behind less intense pullbacks.
This is because these factor have not only been contributing to heavy demand but also cultivated more bullish sentiment.
What does this all mean for Dogecoin? Fewer pullbacks and robust demand in 2025 could set the market up for more excitement.
If the correlation between DOGE and BTC remains, then that means Dogecoin could be set for bullish times ahead.
Strong bullish demand for DOGE means it might have a solid chance at rallying above $1.
Nevertheless, it is also possible that the memecoin may decouple from this correlation sometime down the road.
But what would that look like? DOGE may achieve a robust uptick and push to new historic highs. On the other hand, one decoupling can possibly dent its appeal among the large holders (whales).
Source: https://www.thecoinrepublic.com/2024/12/22/bitcoin-and-dogecoin-commonalities-unravelling-the-correlation-between-the-two/