The Dogecoin Rollercoaster

Batty Insights
Sep 3, 2018 · 2 min read

The price of Dogecoin has risen extraordinarily over the past week. In this piece we will break down what is Dogecoin, what caused its sudden 100% price increase, and what we see for the future price of Dogecoin.

**Disclaimer: Please seek the advice of a professional investment advisor before investing in cryptocurrencies**

What is Dogecoin?

According to dogecoin.com, “Dogecoin is a decentralized, peer-to-peer digital currency that enables you to easily send money online.” The mascot for Dogecoin is a Shiba Inu (Dog) called Doge, and the mascot is the core of the friendly community dedicated to working towards Dogecoin. A strong use case for Dogecoin is “internet tipping,” which is rewarding others on the internet for posting great content.

What caused the rapid price increase?

The price of Dogecoin jumped over 100% in the past week over the news that Dogecoin is demoing a Doge-Ethereum bridge, which is a smart contract and support tool for transferring Dogecoins onto the Ethereum blockchain (and back).

This innovation is important because it increases the functionality of Dogecoin. The metaphor used by Ross Nichol in his explanation of the advancement was that the Doge/Ethereum bridge is the equivalent to exchanging for poker chips at a casino. When you exchange your poker chips at a casino, you have the equivalent value of the base currency in chips. You carry chips, but you have a liquidity option to exchange your chips back to the base currency when you prefer.

There is a Demo scheduled for the bridge reveal on September 5th, 2018. The YouTube link for the demo will be live-streamed here: https://www.youtube.com/watch?v=zOCdtJmCruc . Other key dates to note are that the blog revealing the demo was released to Twitter on August 13th, and according to CoinMarketCap the price had little reaction to the news until two weeks later (on August 29th).

What is the future for Dogecoin 100 days from now?

We ran an exponential smoothing model in R to predict the future price of Dogecoin 100 days from now. Although this model is not perfect for predicting, we felt it would give us a strong range as to where the asset is ttrending. We found no trend or seasonality in our model and estimated a final price to be today’s price, $.0047. One important extrapolation is that the model predicted 100 days from now the price could be as high as $0.012 (80th percentile upper) or as low as $0 (80th percentile lower). The risk in this asset is significantly high, so we suggest that if you invest, invest with caution.

The X axis represents days of the forecast and the Y axis represents Dogecoin’s price level over the past year

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