- Despite fundamental differences, Bitcoin and Dogecoin share a strong correlation
- Short-term trajectory pointed to a DOGE price increase and a BTC decline
Not many cryptocurrencies have survived a decade of existence. And yet, Bitcoin [BTC] and Dogecoin [DOGE] have been in the market for more than 10 years. Despite that, not many are aware of the difference between both.
In this article, AMBCrypto will dive into the similarities and differences between Bitcoin and Dogecoin. You would also learn about their respective price action and on-chain conditions.
Bitcoin vs Dogecoin: Who takes the crown?
Bitcoin and Dogecoin have a few things in common. The most notable one is that they both use the Proof-of-Work (PoW) consensus mechanism.
This similarity is why the blockchains are among the top projects who still stick to mining, instead of adopting the use of validators. However, the major difference between them is their supply.
While Dogecoin’s supply is unlimited, Bitcoin’s maximum supply is 21 million coins, making it a more scarce asset than DOGE. At press time, DOGE was changing hands at $0.12.
This was a 38.19% hike on a Year-To-Date (YTD) basis. As far as Bitcoin was concerned, it was valued at at $61,579 – A 39.42% increase within the same period.
When we assessed the prices of both cryptocurrencies, we noticed that there was a strong correlation. For instance,, according to Macroaxis, the Bitcoin vs. Dogecoin correlation stood at 0.98.
Source: Macroaxis
Values of the correlation coefficient range from -1 to +1. When the reading is close to -1, it means that the prices diverge, and they rarely move together.
However, a coefficient close to +1 implies otherwise. Therefore, the correlation between BTC and DOGE showed that if you invested some money into both coins since the start of the year, you would get almost the same returns.
However, the returns on Bitcoin would be slightly higher. Ergo, the question – Will the prices continue to move in the same direction? Let’s look at it.
DOGE takes the upper hand this time
To ascertain this possibility, AMBCrypto analyzed the In and Out of Money Around Price (IOMAP). This indicator, provided by IntoTheBlock, spots support and resistance levels.
It does this by grouping addresses that bought at a certain price range. Some of which will be in profit, and some in loss. Typically, the larger the cluster of addresses, the solid the support or resistance provided.
At press time, AMBCrypto found that a sell-wall appeared at $62,134. At this point, 1.64 million addresses bought 759,670 BTC. On the other end, 755, 240 addresses bought 445,280 BTC at around $60,793.
Source: IntoTheBlock
Considering the difference, it is likely that Bitcoin might face another decline. If this is the case, the coin risks falling below $60,000. As such, it might not be the best time to buy BTC.
For Dogecoin, it was an entirely different scenario. Unlike Bitcoin, DOGE had its support at $0.12. This, because 86,480 addresses purchased 6.87 billion DOGE at the said price.
This was more than 33,520 addresses that bought 717.77 million coins at a higher value. Thanks to this condition, DOGE might just trade at a higher value in the short term.
Source: IntoTheBlock
Realistic or not, here’s DOGE’s market cap in BTC terms
In addition, the possible target for Dogecoin is between $0.13 and $0.15. Simply put, the memecoin might offer a better return than Bitcoin in the short term.