Not many memecoins have managed to maintain a positive trend in the last month. The dog and cat tokens have both experienced significant drops, falling below their expected levels. Even Dogecoin [DOGE], the biggest of the memecoins, has been affected.
Yet, as the market starts to recover from its recent downturn, there are signs of improvement even among memecoins, with DOGE witnessing an 11% increase from the previous day’s closing price.
While momentum is picking up, DOGE still faces a considerable challenge to recover its losses and turn investors’ positions profitable.
Strategies for DOGE to Break Out
An analysis of the daily chart shows indications of profit-taking as DOGE approaches the $0.50 mark, a level it hasn’t touched in three years. For cautious investors, selling at the peak seemed like the logical choice.
With the Relative Strength Index (RSI) dropping below 40, there is a possibility of a rebound. A low RSI often suggests that an asset is oversold, creating an attractive opportunity to buy during a dip.
However, past experiences advise being wary. Although DOGE’s RSI falling below 40 has led to some minor bullish movements, its well-known volatility keeps traders anxious.
Dogecoin has only experienced significant growth when its momentum coincided with Bitcoin reaching its peak.
So, could Bitcoin be the driving force behind Dogecoin’s breakout from its two-week consolidation? Following weeks of continuous downward movements, DOGE’s daily chart is finally showing signs of recovery with a substantial double-digit rise.
This surge aligns with Bitcoin’s recovery from its recent fall, indicating that the momentum might propel DOGE further ahead.
Nevertheless, with memecoins like DOGE, nothing is straightforward. Despite the low price, retail investors are displaying signs of exhaustion. The speculative nature of these tokens seems to be taking a toll, a trend that requires closer examination.
Is the Risk Still Justifiable?
Since mid-November, retail trading of DOGE has come to a halt as significant holders tighten their control over the market, as illustrated in the chart below.
The increasing dominance of large players with substantial stakes continues to influence the DOGE market, a trend initially highlighted by CryptoCrypto.
However, an interesting shift is occurring: retail trading is diminishing, shifting the focus back to DOGE’s weak fundamentals. Therefore, the recent surge appears to be more about whales taking advantage of the ‘dip’ rather than a genuine change in market sentiment.
In the short term, this buying pressure from whales could push DOGE back to the $0.40 level, but the real challenge awaits thereafter.
For DOGE to reach $0.48–$0.50, it will require more than just hopeful wishes. A combination of bullish Bitcoin trends, fresh retail investments, and reduced manipulation by whales is essential for this surge.
If all these factors align, DOGE could break through successfully. However, if they do not, investing in this memecoin may continue to pose high risks.