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Investigation of Dogecoin Price Movements: A GSADF Analysis

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  • Oncu, Erdem

Abstract

Today, people provide information through different channels. The information channels used can affect the decision-making mechanism due to asymmetric information or different tendencies. Especially in recent years, people use social media to reach information quickly. Therefore, notifications made on social media reveal economic results. Cryptocurrencies are digital currencies intended to be used as currency. Unlike their traditional financial rivals, cryptocurrencies are not backed by a central bank or authority. The success of cryptocurrencies depends on its infrastructure, the block chain. Especially in recent years, the popularity of cryptocurrencies has increased. After the popularization of cryptocurrencies, digital currencies are discussed more especially in the media. In addition to the positive features, negative features are also included in the media. There are concerns about the misuse of cryptocurrencies. It is mentioned that cryptocurrencies provide financing for criminal organizations and are used in money laundering. In addition to these, it is reported that cryptocurrencies are used for tax evasion. The lack of intrinsic value of cryptocurrencies puts investors in trouble in terms of investment and price determination. Cryptocurrencies, which are digital currencies, have many digital price determinants such as social media. Two different objectives were determined in this study. The first is the detection of the presence of bubbles in Dodgecoin prices. The second is the examination of the relationship between bubbles and tweeter notifications. In the study, Dodgecoin prices between May 2020 and May 2021 are examined with the GSADF test. From May 2020 until May 2021, 10 different price bubbles are observed. Some bubbles can be associated with tweets by Elon Musk. However, the biggest bubble observed, the April 2021 price bubble, is due to a different reason.

Suggested Citation

  • Oncu, Erdem, 2021. "Investigation of Dogecoin Price Movements: A GSADF Analysis," MPRA Paper 111212, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:111212
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    References listed on IDEAS

    as
    1. Shen, Dehua & Urquhart, Andrew & Wang, Pengfei, 2019. "Does twitter predict Bitcoin?," Economics Letters, Elsevier, vol. 174(C), pages 118-122.
    2. Philippas, Dionisis & Rjiba, Hatem & Guesmi, Khaled & Goutte, Stéphane, 2019. "Media attention and Bitcoin prices," Finance Research Letters, Elsevier, vol. 30(C), pages 37-43.
    3. Choi, Hyungeun, 2021. "Investor attention and bitcoin liquidity: Evidence from bitcoin tweets," Finance Research Letters, Elsevier, vol. 39(C).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Dodgecoin; Tweets; GSADF;
    All these keywords.

    JEL classification:

    • G0 - Financial Economics - - General

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