- Despite fundamental differences, Bitcoin and Dogecoin share a strong correlation
- The short-term trajectory pointed to a DOGE price increase and a decline in BTC
Not many cryptocurrencies have survived a decade of existence. And yet, Bitcoin [BTC] and Dogecoin [DOGE] have been on the market for more than 10 years. Despite this, not many people are aware of the difference between the two.
In this article, AMBCrypto will discuss the similarities and differences between Bitcoin and Dogecoin. You will also learn about their respective price action and on-chain terms.
Bitcoin vs Dogecoin: who will take the crown?
Bitcoin and Dogecoin have a few things in common. Most notably, they both use the Proof-of-Work (PoW) consensus mechanism.
This similarity is why blockchains are among the top projects still sticking to mining, rather than adopting the use of validators. However, the biggest difference between the two is their offering.
While Dogecoin’s supply is unlimited, Bitcoin’s maximum supply is 21 million coins, making it a scarcer asset than DOGE. At the time of writing, DOGE was changing hands for $0.12.
This was an increase of 38.19% on a Year-To-Date (YTD) basis. As for Bitcoin, it was valued at $61,579 – an increase of 39.42% within the same period.
When we assessed the prices of both cryptocurrencies, we noticed that there was a strong correlation. For example, according to Macroaxis, the correlation between Bitcoin and Dogecoin was 0.98.
Source: Macroaxis
Values of the correlation coefficient range from -1 to +1. When the value is close to -1, it means that prices diverge and rarely move together.
However, a coefficient close to +1 implies something else. Therefore, the correlation between BTC and DOGE showed that if you invested some money in both coins since the beginning of the year, you would get almost the same returns.
However, the return on Bitcoin would be slightly higher. Ergo the question: Will prices continue to move in the same direction? Let’s look at it.
DOGE takes the upper hand this time
To determine this possibility, AMBCrypto analyzed the In and Out of Money Around Price (IOMAP). This indicator, provided by IntoTheBlock, signals support and resistance levels.
This is done by grouping addresses that purchased in a certain price range. Some of it will be profitable, some of it will be a loss. Typically, the larger the cluster of addresses, the more solid the support or resistance provided.
At the time of writing, AMBCrypto discovered that there was a sales wall popped up for $62,134. Currently, 1.64 million addresses purchased 759,670 BTC. On the other hand, 755,240 addresses bought 445,280 BTC for approximately $60,793.
Source: IntoTheBlock
Given the difference, it is likely that Bitcoin will face another decline. If this is the case, the coin is in danger of falling below $60,000. As such, it may not be the best time to buy BTC.
For Dogecoin it was a complete different scenario. Unlike Bitcoin, DOGE had its support at $0.12. This is because 86,480 addresses bought 6.87 billion DOGE for the stated price.
These were more than 33,520 addresses that purchased 717.77 million coins at a higher value. This condition would allow DOGE to trade at a higher value in the short term.
Source: IntoTheBlock
Realistic or not, here is DOGE’s market cap in BTC terms
Moreover, the possible target for Dogecoin is between $0.13 and $0.15. Simply put, the memecoin could offer better returns than Bitcoin in the short term.