2 reasons Shiba Inu and Dogecoin are soaring this weekend

Momentum is back, but it's more than momentum driving these tokens higher.

| More on:
graph showing rising share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Positive momentum is reshaping the discussion around the crypto sector, once again. For meme projects such as Shiba Inu (CRYPTO: SHIB) and Dogecoin (CRYPTO: DOGE), this has materialized into some rather impressive gains. As of 11 a.m. ET, these two meme coins had appreciated 9% and 6.5%, respectively, over the past 24 hours.

Forced liquidations of these meme tokens have driven most of the incredible volatility with Shiba Inu and Dogecoin in recent days. For Shiba Inu in particular, liquidations of the SHIB, 1000SHIB, and SHIB1000 contracts have been more than 80% on the short end of this trade, according to the website Coinglass, which tracks this data. This means that those shorting this meme token are increasingly having their positions liquidated, forcing the price of SHIB higher, in a similar fashion as short-covering in the stock market. 

For XRP (CRYPTO: XRP), today's gain is slightly more muted than its meme token peers. As of 11 a.m. ET, XRP shot 3.2% higher over the past 24 hours, as this token maintains positive momentum following news last week that the project's parent company Ripple may be close to concluding its ongoing litigation with the SEC that's spanned more than a year.

So what

Forced liquidations continue to drive a significant percentage of the overall volatility in the market. At 11 a.m. ET, over the past four hours, Shiba Inu, Dogecoin, and XRP took 3rd, 4th, and 5th place in terms of forced liquidations (mostly short-related), after Bitcoin and Ethereum. This signifies, among many things, that these three tokens are among the most-traded in the market, and investors appear to be most bullish on the near-term prospects of these projects.

For XRP, investors appear to be banking on some sort of litigation resolution or near-term even that could drive short-term volatility with this token. In general, the market has viewed recent news that the judge overseeing the SEC vs. Ripple case has allowed for documents to be unsealed a small victory for the XRP camp. While the outcome remains uncertain, crypto investors (like all investors) like certainty. Thus, a resolution (good or bad) to this saga is being priced into the coin with positive effects right now.

Now what

Interestingly, these three tokens are among the highest-flyers in the crypto market over the past week. Unlike previous rallies, which saw these tokens give up a majority, if not all, of their gains in short order, this week has provided somewhat "stickier" returns for investors. Accordingly, outside investors may be wondering whether the near-term catalysts driving these tokens higher can be maintained for an extended period of time. 

I think the jury is still out on with respect to this idea. However, given the macro environment we're in now, it's likely the crypto market will continue to see volatility from here. Accordingly, investors should fasten their seatbelts -- this ride may get a lot bumpier from here. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Chris MacDonald owns Ethereum. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and recommends Bitcoin and Ethereum. The Motley Fool Australia owns and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
International Stock News

Bull vs. bear: Can the S&P 500 keep rising in 2024?

We review the bull and bear case for the S&P 500 this year.

Read more »

woman with coffee on phone with Tesla
International Stock News

Why Tesla stock put pedal to metal today

Tesla's robotaxi is coming in August.

Read more »

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
International Stock News

If you invested $10,000 in Nvidia stock the day ChatGPT came out, this is how much you'd have today

Buying Nvidia when the disruptive AI chatbot launched would have been a smart move.

Read more »

A Tesla car driving along a road at sunset
International Stock News

Why Tesla stock was climbing today

Investors were encouraged by news of a price hike on the Model Y.

Read more »

Plate with coloured wedges being parcelled out like a slice of pie representing a share split
International Stock News

Stock-split watch: Is Nvidia next?

Nvidia last split its stock when it traded for a pre-split $744 in 2021.

Read more »

A woman in jeans and a casual jumper leans on her car and looks seriously at her mobile phone while her vehicle is charged at an electic vehicle recharging station.
International Stock News

1 Wall Street analyst thinks Tesla stock is going to $125. Is it a sell?

Tesla is no longer a magnificent stock, according to a Wells Fargo analyst.

Read more »

A young man goes over his finances and investment portfolio at home.
International Stock News

Is Nvidia stock a buy?

The company's stock could rise 40% over the next two years and outperform the S&P 500.

Read more »

Man with hands in the middle of two items with money bags on them.
International Stock News

Is Nvidia headed for a stock split?

Nvidia stock has split five previous times in the company's history.

Read more »