Doge coin is a cryptocurrency, which was a joke and meme about the payment system. As you can see, from the name and logo, Dogecoin is derived from the Shibe doge meme. The biggest feature of Doge Coin is that it can be mined indefinitely without reducing the issuance volume. In general, value is inversely proportional to supply. So, from an economic point of view, Doge coin was nothing more than a joke. But Elon Musk started to add value to it via his Twitter account.
It was confirmed that the price and volumes of Dogecoin has risen significantly from 2021.
However, since the price increase in 2021 is too large, you may miss the changes in other periods.
I analyzed the trend more closely by taking the natural logarithm of the price and volume of Doge Coin.
In this case, it was confirmed that there was a significant price increase in 2017, although not as much as the increase in 2021.
Trading volume has been steadily increasing from 2014.
If you had owned Dogecoin from the very beginning, you would have seen a 650x return.
If it was sold at the highest point, it would be 2336x.
If you bought Doge Coin on January 1st of every year, what would the return be?
Five years would not have been much fun.
But if it was in 2017 and 2021, it is more than 390x.
This is a return box graph assuming that you pick a random date and make an investment for 3 months.
This graph shows three things.
- In 2017, the outliers of returns are very large. In other words, they showed very high returns in a certain period and not the rest.
- 2021 was a period of high returns at any time.
- There appears to be no significant change in returns for the rest of the period.
Elon Musk’s Tweeter Effect
Elon Musk first mentioned Dogecoin in April 2019.
And he was uploaded by a lot of Twitter in February 2021, which was the catalyst for the price increase.
Sentimental analysis of Twitter sentences was also conducted, but it does not seem to good results.
Most of the results were neutral, which seems to be due to the nature of Twitter, which consists of short sentences.
Below is an example marked as neutral in sentimental analysis.
- @Dogecoinrich 🤣🤣
- Dogecoin is the people’s crypto
- Dogecoin rulz
However, anyone can see that these Twitter sentences have a positive view of Dogecoin.
What if you had bought Dogecoin as soon as Elon Musk tweeted it?
The graph above shows the return for 7 days after purchase.
The most influential day is the day Twitter is posted, and there is no significant change in the distribution for a week after that.
The median values were all positive for one week.
However, as time goes by, the price increase due to Twitter is getting smaller, and there are cases where it goes to negative profits on some days.
If you had bought Dogecoin right after Elon Musk’s Twitter, you would have earned 20-50% or more in 7 days in the early days.
However, it is unknown whether Elon Musk’s influence has fallen or whether the liquidity of the cryptocurrency market has increased, but now it cannot be expected that there will be only profits.