Investigation of Dogecoin Price Movements: A GSADF Analysis

Erdem Oncu

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Dodgecoin; Tweets; GSADF (search for similar items in EconPapers)
JEL-codes: G0 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ban and nep-pay
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