Inverse relationship between Dogecoin and Bitcoin markets over the past 36 hours



The Bitcoin market rallied yesterday for the first time in a month, and the price per Bitcoin briefly touched $500: http://www.usacryptocoins.com/thecryptocurrencytimes/uncategorized/bitcoin-rally-price-per-bitcoin-briefly-touches-500/ The Bitcoin rally can be seen in the above chart. Price was near $455 before the rally, and it rose $45 (10%) over 6 hours. The price per Bitcoin has been relatively steady since then and is averaging $495.

A chart of the Dogecoin market for the same period can be seen above. The price per Dogecoin had been steady near 100 satoshis (1 satoshi = 0.00000001 Bitcoin) for a few days and began to decline when the Bitcoin rally started. When the Bitcoin rally peaked at $500, the price per Dogecoin was 96 satoshis. Even though the Bitcoin market stopped going up after that point, the Dogecoin market has continued to decline and is now at 92 satoshis. Overall the price per Dogecoin relative to Bitcoin has dropped 9% in the past two days, while price per Bitcoin relative to the USD has risen 10%.

The relationship between the Dogecoin and Bitcoin markets over the past couple of days isn’t an exact inverse correlation. The Bitcoin market rallied sharply and then steadied out, while the Dogecoin market has steadily declined ever since the rally started. However, the general trend is clear: as Bitcoin gained value, Dogecoin lost value relative to Bitcoin.

What causes this inverse relationship is unclear. Perhaps as Bitcoin rises, people sell their Dogecoin for Bitcoin, since they perceive Bitcoin as a more profitable investment at the time. This can lead to a feedback loop, where a few people selling, for this reason, causes the price of Dogecoin to drop, and then more people sell Dogecoin for Bitcoin to protect their investment’s value. It could also be a coincidence, but the sharp decline in Dogecoin price began right as Bitcoin’s price rallied.

The price per Dogecoin relative to USD has stayed relatively constant during the past couple of days. It was $0.000455/Dogecoin before the Bitcoin rally and is $0.000455/Dogecoin currently. Permanently, the rise in Bitcoin’s price has been canceled out by the fall in Dogecoin’s value relative to Bitcoin. This conservation of Dogecoin’s USD value might be an indication that the USD versus Dogecoin markets control Dogecoin’s price, rather than the Bitcoin versus Dogecoin markets. This would be surprising since most Dogecoin trading is done on Bitcoin versus Dogecoin markets.

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