Surprise as Dogecoin skyrockets by 20% as Bitcoin plunges

The price climbed to $63,154.29 in late March but dropped to a low of $57,533.58 on Wednesday. It’s since recovered some ground to $57,763.70.

The relationship between inflation and bitcoin is complicated. Some believe that when inflation rages, crypto should spike.

But the volatile nature of bitcoin during this inflationary period has put that wisdom in question.

Gold is the traditional hedge against inflation and there was speculation that bitcoin could also be a useful store of value as the dollar weakens.

The price of gold has spiked sharply in the past six months — amid global concerns about Russia’s invasion of Ukraine and rising inflation.

But bitcoin’s price has not followed suit, instead it has stayed largely stagnant.

Skyrocketing inflation is becoming a central concern of US authorities, which could be weighing down the crypto market.

At a recent webinar, US Federal Reserve Governor Lael Brainard said, “It is of paramount importance to get inflation down.”

She warned the Fed would continue tightening its monetary policy methodically through a series of interest rate increases

And at the Fed’s March policy meeting, several US Federal Reserve officials supported raising interest rates by half a percentage point in the future to combat inflation, according to minutes released on Wednesday.

Bitcoin sank 3 per cent after Ms Brainard’s statements, but stabilised later in the day.

There’s better news for dogecoin however.

The price of dogecoin is up about 20 per cent for the month and there was sharp rise after billionaire Elon Musk purchased a large chunk of Twitter stock. He was also made a director of the company.

CoinDesk reports that doge rose 11 per cent after Twitter’s announcement that Mr Musk would be appointed to the company’s board of directors. The price has since stabilised.

The Tesla CEO is a proponent of dogecoin, with the market closely watching his statements.

There are even rumours that doge payments could somehow be integrated into the social media company’s platform.

However, Bob Iaccino, chief strategist at Path Trading Partners, told CoinDesk that was unlikely to happen.

“It’s wishful thinking on the part of those invested in dogecoin,” Mr Iaccino said.

“If anything, his position on Twitter’s board makes it harder for him to use Twitter (if we were to assume he was deliberately using Twitter for this purpose) to pump the price of anything at all. He is in much more specific danger of regulatory action if he does that.”