Dogecoin (DOGE) soared on Oct. 28 amid massive capital rotations out of its top meme coin rival’s market, Shiba Inu (SHIB).
Notably, DOGE’s price rallied by a little over 44% to reach its intraday high of $0.3449. Its gains appeared in contrast to SHIB’s losses in the same period. On the other hand, the so-called “Dogecoin killer” dropped almost 28% to log an intraday low at around $0.000057; in the same hour, DOGE printed its daily top.
The sudden price rally also pushed DOGE’s market capitalization to over $40 billion, a mettle that Shiba Inu achieved hours before, with the two cryptocurrencies now neck-and-neck and currently battling for the ninth place by market cap.
Traders started flocking into Dogecoin markets hours after Elon Musk, CEO of Tesla and SpaceX, posted a new tweet about the meme cryptocurrency.
Musk’s earlier supportive tweets prompted DOGE to climb by more than 1,500% in the first five months of 2021.
Long DOGE, short SHIB
Shiba Inu rallied exponentially heading into Q4, rising by around 1,200% in October on hopes that it would gain a listing on Robinhood, a United States-based zero-fee trading app, and its foray into the emerging decentralized finance and nonfungible token sectors with new product launches.
Nonetheless, SHIB’s supersonic bull run has also made it overvalued, based on some key metrics, notably the Relative Strength Index. Thus, it appears that spot and derivative traders have decided to secure and/or rotate their profits.
Su Zhu, co-founder, CEO and chief information officer of fund management firm Three Arrows Capital, noted earlier on Thursday that traders rotated their easy-to-short Shiba Inu perpetual swap profits — as SHIB topped out at $0.00008854 — into the Dogecoin perpetual market.
The former Deutsche Bank trader suggested that DOGE can rally toward $0.88 next should traders rotate profits from SHIB to Dogecoin.
Around $20.8 million DOGE rekt
Dogecoin’s price moves also caught derivatives traders off-guard as they lost about $20.8 million in total liquidations across the previous 24 hours. Around $18.17 million worth of those liquidations emerged out of leveraged long bets after DOGE’s price dropped to its weekly low of $0.2179 on Wednesday.
In contrast, the ongoing 12-hour timeframe saw bears taking more losses than bulls, with $8.9 million worth of bearish Dogecoin bets getting liquidated against $5.22 million worth of bullish bets concerning the same token.
On the whole, however, Dogecoin traders were the majority short in the previous 24 hours, with FTX and OKEx users turning out to be exceptionally bullish, with 58% and 77% of their net positions skewed long, respectively.
A sudden bearish reversal in the Shiba Inu market also led to SHIB liquidations worth $31.41 million, the third-highest among all cryptocurrencies in the previous 24 hours.
PostyXBT, an independent market analyst, warned about excessive leverages in both SHIB and DOGE markets.
“Play spot and not leverage,” he said, adding, “The volatility could quite easily wipe out before a big move in intended direction.”