After emerging as a meme cryptocurrency, dogecoin's rise is cemented by the trading volume that has temporarily placed the cryptocurrency in the same ranks as established digital currencies like bitcoin and ethereum. The trading volume highlights the magnitude of interest dogecoin has recorded in recent months. 

According to data acquired by cryptocurrency trading simulator Crypto Parrot, DOGE was the third most traded cryptocurrency on the largest digital asset exchange Binance with a volume of $116 billion in May. On the exchange, ethereum recorded the highest trading volume at $191 billion, followed by bitcoin at $188 bitcoin. 

On the Huobi crypto exchange, DOGE also ranked third with a trading volume of $51 billion, trailing second-ranked bitcoin by just $13 billion. Ethereum also topped with a volume of $85 billion. 

Why dogecoin is recording high trading volume 

The significant dogecoin trading volume reflects the cryptocurrency's exponential rise in value in 2021. From the start of the year to the end of May, the crypto's value had surged 7,900%. 

The rise of dogecoin can be attributed to the fact that the asset is community-driven, and the value has mostly been determined by power and influence on social media by influencers. Notably, Tesla CEO Elon Musk is instrumental in the rally by consistently tweeting his support for the cryptocurrency. 

The trading volume also shows that traders have managed to sustain the hype around DOGE despite the price correction. In recent months, traders have continued to speculate that the coin can keep climbing based on social media momentum and celebrity support. However, the speculations left investors vulnerable after almost the entire crypto market slump led by bitcoin.

Furthermore, dogecoin gained special attention in May after Musk announced that Tesla would no longer accept bitcoin for vehicle purchases due to environmental concerns. He noted that the company is looking for an alternative energy-efficient crypto, with many speculating that dogecoin is a possible replacement. 

The speculation potentially drove interest in dogecoin. At the same time, Musk announced SpaceX's next mission to the moon would be found by dogecoin, a development that offered the crypto its first formidable utility. Notably, if more companies adopt DOGE for payments, then crypto can easily become a wide-scale functional currency since it might have purchasing power. 

Bitcoin’s May troubles reflected in trading volume 

Elsewhere, in May, bitcoin encountered a rough path, with the price dropping by almost 50% from the April 14th all-time high of $64,800. The impact in the price is partly due to the increased regulatory crackdown in jurisdictions like China and increased focus on the asset's energy consumption. In addition, the impact is reflected on the trading volume that trails ethereum. 

Additionally, Tesla's suspension of bitcoin potentially slowed down institutional interest as more traditional players moved to protect the interests of environmentally conscious investors. Notably, institutional adoption of bitcoin was key in driving the asset's price this year. 

Generally, dogecoin's tremendous trading volume on the two major exchanges indicates that the asset is competing against established cryptocurrencies. On the flip side, analysts have warned that DOGE's rally might be a bubble that will burst soon because the crypto has no proven utility and lacks a formidable support base.