The worth of Dogecoin (DOGE) rallied by roughly 25% on Dec. 20 as Tesla CEO Elon Musk as soon as once more drew consideration to the meme-inspired cryptocurrency. 

Elon Musk and his enthusiasm towards Dogecoin is a long-running meme. Each now and again, Musk likes to tweet about Bitcoin (BTC) and the crypto market. When he does, the market reacts to it fairly aggressively.

Musk final tweeted about Dogecoin in July 2020, when he stated he foresees a “Dogecoin normal future.” On the time, DOGE rallied 14%.

The rationale behind Dogecoin’s upsurge when Musk tweets is kind of easy. As cryptocurrency researcher Hasu explains, “costs on this house are fueled by consideration.” Therefore, when there’s a vital enhance in consideration, a low market cap cryptocurrency can enhance quickly.

Dogecoin 1-hour value chart (Binance). Supply: TradingView.com

Dogecoin trending on Twitter

On Dec. 20, Musk began to tweet about Bitcoin, posting a number of tweets in regards to the dominant cryptocurrency.

Within the midst of it, Musk tweeted “One phrase: Doge,” which brought on a frenzy on Twitter. Dogecoin began to pattern on the platform, particularly as Musk modified his bio to “Former CEO of Dogecoin.”

In accordance with knowledge from CoinMarketCap, Dogecoin has a market capitalization of round $549 million. In comparison with main cryptocurrencies, like Bitcoin, Ether (ETH) and high decentralized finance (DeFi) tokens, DOGE’s valuation is considerably decrease.

Furthermore, as a result of DOGE is just the forty fourth largest cryptocurrency on the earth, its quantity and liquidity are decrease than the highest cryptocurrencies.

As such, when an influential determine, like Musk, talks about DOGE, the cryptocurrency typically surges because the buying and selling exercise instantly rises.

In November, different main altcoins noticed the same pattern. As an illustration, as Cointelegraph reported, XRP surged massively as Bitcoin started to rally in the direction of $19,000. On Coinbase, it surpassed $0.90 whereas hitting round $0.75 on different main exchanges.

What does DOGE’s surge point out?

Technical analysts and merchants pinpoint that the upsurge of DOGE led to the beginning of altcoin cycles prior to now. A pseudonymous dealer generally known as “Crypto Capo” said:

“Each altseason begins with $DOGE pumping.”

The likelihood of an altcoin season rising stays excessive as a result of Bitcoin faces a serious resistance at $25,000 primarily based on change orderbook knowledge.

The dealer additionally famous that Bitcoin would probably hit $25,000 first, drop to $21,000 to reclaim help, and make its run in the direction of $30,000. The dealer said:

“Potential roadmap for $BTC -$25k, then $21k-22k, then $30k Dips are for purchasing.”

If a situation much like this happens, the biggest beneficiary would probably be altcoins. Merchants would search for higher-risk performs to offset the declining volatility within the Bitcoin market.

The mixture of those components means that the rally of DOGE may mark the beginning of a brand new altcoin cycle within the foreseeable future.