Last night, the meme cryptocurrency fell behind SHIBA INU in the market cap rankings. However, investors are helping it get back on track.
A mean reversion move to equalize the market caps of Dogecoin and SHIBA INU seems to happen, as this morning SHIBA INU was down -10% whereas DOGE was up by almost 50%.
Techniques that try to capture gains when the asset price gets back to normal levels are called mean reversion strategies. A trading approach like this doesn’t always mean the price will decline; it just means two connected assets will be brought back next to one another.
It’s also possible that the mean will simply rise to meet the price. Because the price has returned to its average, this would also be considered reversion to the mean. Prices don’t stay at the mean for long, although there is the frequent reversion to the mean.
Dogecoin and SHIBA INU, two large-cap cryptocurrencies with associated meme value and market capitalization, were the focus of Wednesday’s mean reversion transaction.
SHIBA INU fell to $0.00005 from a high of $0.00008 the night before whereas DOGE rose to over $0.33 from under $0.23 last night. For a few hours, SHIBA INU surpassed Dogecoin with a market cap of $36 billion, surpassing Dogecoin’s $31 billion market cap.
Traders entered the market to short Shiba Inu at the $0.00008 price level, betting against and profiting from declining prices.
SHIB longs were liquidated for roughly $50 million when prices dropped, part of a broader market drop that saw $232 million liquidated across various cryptocurrencies, as reported by analytics tool Bybt.
Yesterday the ultimate favorite cryptocurrency was SHIBA INU. As of Wednesday night, almost $36 billion in SHIB has been traded, second only to Bitcoin’s $45 billion and Tether’s $75 billion. It surpassed more technically advanced blockchains such as Ethereum and Solana to become the second most traded asset.
In the meantime, the short SHIBA INU, long Dogecoin trade appeared to be playing out among the main traders. One of them was the CEO of Three Arrows Capital, Su Zhu who got to Twitter to comment on it.
88e-6 $shib touched
rotatooor to .88 $doge now? pic.twitter.com/AqRd85rCSk
— 朱溯 (@zhusu) October 28, 2021
In a tweet on Tuesday, GCR, an anonymous trader ranked among the main traders on crypto exchange FTX by volume and earnings, cautioned about the trade-in progress.
Today’s mean-reversion move could be restricted to an intraday market segment or become part of a larger SHIBA INU-Dogecoin interplay. Traders are certainly glued to their screens, following these meme tickers.
Also Read: Dogecoin Price Prediction 2022 – What Will the Dogecoin Price be in 2022 and in Next Years to Come?