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Dogecoin Surpasses Bitcoin in Price Stability During Crypto Trading Slowdown

Sep 25, 2023 at 08:45 am

The reduced volatility of DOGE indicates a waning interest among investors in trading alternative cryptocurrencies.

As of now, DOGE's 30-day historical volatility, calculated by TradingView, stands at 30%, notably lower than Bitcoin's 35%. This metric is derived from the standard deviation of the daily percentage changes in an asset's price over a specific period.

Traditionally, DOGE has been more volatile than Bitcoin, which has understandably deterred risk-averse investors. Bitcoin's long-standing presence in the market since 2009 and its evolution into a macro asset, coupled with increased institutional involvement over the past three years, has solidified its position. In contrast, DOGE, originating in 2013, has often been perceived as a less serious cryptocurrency venture.

BTC's 30-day volatility lower than DOGE's - TradingViewBTC's 30-day volatility lower than DOGE's - TradingView 

While DOGE's recent shift towards being less volatile is noteworthy, it doesn't necessarily signify market maturity. Instead, it likely results from a diminished interest among investors in alternative cryptocurrencies.

Bitcoin's dominance in the overall crypto market has risen from nearly 40% to 50% this year, indicating a shift of liquidity from alternative cryptocurrencies towards Bitcoin. Bitsday data reveals that while BTC's price has increased by 60% this year, DOGE has experienced a modest decline of just over 12%.

This trend is also reflected in key liquidity indicators, such as the aggregate 1% market depth, which measures bids and asks within 1% of the mid-price across all order books on major crypto exchanges. Data tracked by Paris-based Kaiko indicates that the aggregate 1% market depth for the top 10 altcoins was significantly lower than that of Bitcoin and Ethereum by the end of the previous month.

Altcoin Market Depth 1% Lower than BTC and ETH - KaikoAltcoin Market Depth 1% Lower than BTC and ETH - Kaiko 

The entire market has seen a widespread decrease in activity, with spot market trading volumes hitting a four-year low of $475 billion in August.

The limited liquidity observed in DOGE and other coins aligns with the uncertain regulatory landscape surrounding smaller cryptocurrencies. Earlier this year, the U.S. Securities and Exchange Commission (SEC) referred to several altcoins as securities in its lawsuit against leading digital asset exchanges Coinbase and Binance. Although DOGE and SHIB were not specifically mentioned, potential stricter regulations for altcoins could eventually have an impact on meme coins as well.

Read more: Crypto Conflict: A Tale of Tragedy

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