Dogecoin’s rise faces a harsh reality as
the memecoin dropped nearly 10% within a day, reaching as low as $0.3411 today
(Wednesday). The decline comes as the broader cryptocurrency market faces a bear
market, with Bitcoin currently trading at $95k from around $102k the previous
day.
A mix of macroeconomic concerns and bearish technical
patterns suggests further downside for Dogecoin in the weeks ahead. Dogecoin’s
fall coincides with a market-wide sell-off in risk assets, including U.S.
equities.
Macroeconomic Headwinds
The trigger of the current sell-off could be the
strong U.S. economic data, such as the ISM services report and JOLTS job
openings, highlighting persistent economic robustness, Cointelegraph reported.
This data shifted investor expectations, eroding
hopes for Federal Reserve rate cuts before mid-2025. The benchmark 10-year U.S.
Treasury yield spiked to its highest level since May 2024, further discouraging
risk-taking behavior.
At the time of publication, DOGE traded for $0.3466,
representing a price drop of 5% and 9%, in the past day and week, respectively.
According to CoinMarketCap data, the memecoin’s marketcap has dropped 5% to
around $51 billion, ranking seventh in the crypto list.
The crypto market has experienced heightened volatility recently. According to Coinglass, Dogecoin liquidations in the past 24 hours amounted to $19.84 million. Of these, $15.72 million were long positions, while $5.12 million were short positions.
Liquidation events occur when leveraged traders are
forced to close positions as prices drop. Dogecoin’s current price action
aligns with its technical outlook, which also points to a downward momentum.
Dogecoin’s current price action aligns with a classic
bull flag pattern. On the daily chart, the price is currently below the
50-moving average, although it remains above the $200 moving average. The price dropped from $0.3950 on Jan 5 to $0.3439.
Technical Analysis
Currently, DOGE is trading at an important support
level on the daily chart. If this support level does not hold, the next level
to watch is $0.3140. The Relative Strength Index is at 48, meaning it remains
above the oversold zone, and further downward momentum could be seen before any
change of sentiment.
On the weekly chart, things are no different. The
price has formed a bearish candle stick after bouncing off the $0.3117 support
level. Despite the bearish outlook, Dogecoin retains the potential for a strong
rebound.
If the price can rise above $0.3937, it could welcome a positive price movement. However, macroeconomic challenges, including rising
Treasury yields and liquidation pressures, continue to cloud the immediate
outlook for DOGE and other cryptocurrencies.
This article was written by Jared Kirui at www.financemagnates.com.
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