For several months in a row, the media attention shifted to cohorts of retail traders gathering on social media platforms, and making risky investments on heavily shorted stocks and cryptocurrencies. At first, the attention was focused on Bitcoin, which had been promoted heavily on Twitter by Tesla’s CEO and founder Elon Musk.
Tesla announced a $1.5 billion Bitcoin investment at the beginning of the year, but as of late, Elon Musk’s view on BTC has changed, mainly due to the impact on the environment and the energy used by the blockchain. As Bitcoin got in the rearview mirror, online retail traders turned to Dogecoin, which had posted its largest bull run on record.
Dogecoin still in the spotlight?
With $48 billion in market capitalization and a price per token of 37 cents at the time of writing, Dogecoin is still one of the biggest surprises of 2021, even though it has retraced sharply from all-time highs. The cryptocurrency created as a joke several years back had been benefiting from large retail flows and defied all valuation metrics.
DOGE topped on May 8th, 2021 around 72 cents and has been trading in a volatile fashion ever since, showing that in such an environment, traders wanting to take advantage of price movements, need to shift away from traditional exchange platforms and choose a different avenue like cryptocurrency trading.
Since Dogecoin is currently covered by premium cryptocurrency trading platforms, such as Coinrise, retail traders can get involved in the market, without having to own tokens, but simply use derivatives tracking the exact price performance as the underlying instrument.
Volatility creates incentives for short-term trading
Although DOGE volatility has settled, high profile websites like InvestingCube are predicting this might be the calm before the storm, as groups of retail traders could, at any point, start a new buying frenzy, incentivized by more attractive valuations, now that the price is trading well-below the all-time high.
Working with Coinrise or other specialized trading platforms, becomes one of the best ways to take advantage of volatility surges in crypto valuations, while also keeping risk under control, using a variety of trading tools.
Despite strong interest from both the retail and institutional side this year, cryptocurrencies are still labeled as highly speculative assets, making it difficult to predict how valuations might perform in the near term.
Professional traders to face continuous difficulties?
Professional traders seemed to be overwhelmed by the power of retail traders, making investing decisions via online social media platforms, since this new approach defies all traditional rules. The idea of “value” had been ignored and instead, flow-driven price developments had been in the spotlight.
Experts believe that such market conditions can’t be sustained indefinitely, and at some point, things could get a turn to the south. Timing the market correctly will be a critical factor and only by using a short-term approach should traders anticipate and take advantage of key turning points.