Dogecoin (DOGE), the largest meme cryptocurrency by market value, is currently exhibiting a lower annualized 30-day realized volatility at 30%, compared to Bitcoin’s (BTC) at 35%, according to data from TradingView. This shift signifies a change in the relative price stability of these two cryptocurrencies, reported on Friday.
Historically, Dogecoin has been associated with higher volatility than Bitcoin, which has deterred risk-averse investors. Bitcoin, present in the market since 2009, has evolved as a macro asset with increasing institutional participation over the past three years. In contrast, DOGE, launched in 2013, has often been viewed as a light-hearted and non-serious cryptocurrency project.
However, this new-found status as a less volatile asset for Dogecoin should not be taken to imply market maturity. It likely stems from a lack of investor interest in alternative cryptocurrencies. The dominance rate of Bitcoin, or its share in the total crypto market, has surged to 50% from nearly 40% this year. CoinDesk data shows that while Bitcoin’s price has gained 60% this year, Dogecoin has experienced a modest decline of just over 12%.
The shift in liquidity from alternative cryptocurrencies to Bitcoin is further highlighted by key liquidity metrics like the aggregate 1% market depth. This metric measures the bids and asks within 1% of the mid-price for all order books on major crypto exchanges. Data tracked by Paris-based Kaiko at the end of last month showed that the aggregate 1% market depth for the top 10 altcoins was significantly below that of Bitcoin and Ether.
There has been a market-wide decline in activity with trading volumes in the spot market hitting a four-year low of $475 billion in August. The low liquidity in DOGE and other coins aligns with the murky regulatory outlook for smaller cryptocurrencies. Earlier this year, the U.S. Securities and Exchange Commission (SEC), in its lawsuit against leading digital assets exchanges Coinbase (NASDAQ:COIN) and Binance, referred to several altcoins as securities. Although DOGE and SHIB were not mentioned, potential stricter regulations for altcoins could eventually affect meme coins.
The market has also seen a surge in Ethereum gas fees, soaring 1,900% from 15 to around 300 Gwei. This increase was reflected in simple Peer-to-Peer (P2P) transactions, which rose from the conventional 40 cents to around $10, according to data from Dune analytics. Despite these changes, Bitcoin price remains unfazed by the US CPI announcement on September 13 and continues to move in a range, with a potential short-term recovery rally on the horizon as indicated by the weekly chart.
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