Bitcoin, Dogecoin: Decoding the Relationship and Price Action

Bitcoin and Dogecoin have some interesting characteristics that highlight their similarities, including their price movements. First, both are pioneers in their respective segments, with BTC being the first cryptocurrency and DOGE being the first memecoin. Both Dogecoin and Bitcoin have demonstrated similarities in price action. The correlation observed over the past few months is mainly due to DOGE mimicking the price fluctuations of BTC. The prices of these two assets do not necessarily have to move together consistently, but most of the peaks and bottoms are similar. For example, Bitcoin has reached a new ATH this month, but DOGE has not yet retested its highest level of 2021.

However, DOGE traders investing in memecoins based on Bitcoin price volatility have achieved significant success. The organizations and activities of whales are a common denominator for the prices of Bitcoin and Dogecoin. Organizations have been at the forefront of Bitcoin price action through ETFs since they were approved earlier this year. Meanwhile, Dogecoin whales are also mimicking the inflow and outflow of ETF funds. Speaking of whale activity, recent reports reveal that they purchased over a quarter billion DOGE tokens in the latest dip.

It's no surprise that Bitcoin has also experienced a recent consolidation spike as the price dropped below $95,000. The surge caused the price to bounce back above $99,000 at the time of writing, marked by strong whale activity. According to IntoTheBlock data, the funds of large holders have surged from 1.490 BTC on December 19 to 15.260 BTC the next day. A significant increase in the funds of large holders was observed during the same period.

The outflow of funds remains low at 12.820 BTC as of December 20, confirming larger buying pressure than selling pressure. However, ETF data remained negative on Thursday and Friday for the first time since the beginning of December. But what will happen next with Bitcoin and Dogecoin when 2025 comes? Some analysts believe that the recent sharp pullback is a classic sign that we are heading for more volatility in the future. A major drop is possible as BTC continues to rise to new highs. However, that's not necessarily the result of the 2025 bull run. A recent analysis by Glassnode highlights that the 2024 bull market has seen limited decline so far. Factors influencing withdrawal and optimistic psychology This is unlike previous bull markets when cryptocurrencies experienced massive declines. According to analysis, the increasing interest of organizations and the strong demand for Bitcoin ETF are the reasons why the retreat is not too intense. This is because these factors not only contribute to creating great demand but also create a more optimistic psychology.

What does all this mean for Dogecoin? Fewer pullbacks and strong demand in 2025 could make the market more excited. If the relationship between DOGE and BTC continues, it means that Dogecoin may have a period of price increase coming soon. The strong demand for DOGE implies it may have a big chance to rise above $1. However, there is also a possibility that memecoin will break away from this correlation at some point in the future. But how would that happen? DOGE could achieve strong growth and push to new all-time highs. On the other hand, a split could reduce its appeal to large holders (whales). DYOR! #Write2Win #Write&Earn $DOGE {spot}(DOGEUSDT)