The decline of Dogecoin from its peak of $0.48 has eroded the crucial support at $0.30, and now the focus is on the next significant low at $0.23.
There are indications of a slowdown in whale activity, as per reports from CryptoCrypto, leading to speculation about a potential sharp decrease in Dogecoin’s value.
A closer look at the chart reveals a surge in volume since DOGE’s peak, reminiscent of the hype seen during its election rally, surpassing $7 billion, as indicated by the long green wick.
However, unlike the previous surge, there is a lack of consistent volume this time around, raising concerns about Dogecoin’s reputation for volatility.
Interestingly, Dogecoin’s price movement is now resembling that of Bitcoin, underscoring the importance of a broader market recovery for capital inflow back into DOGE.
Despite the current holding pattern being construed as a positive indicator for a breakout, there remains the possibility of Dogecoin defying conventional expectations and moving in a different direction.
Evaluating the Factors Working Against DOGE
For a meme-based cryptocurrency, DOGE’s Social Volume has witnessed a notable decline since early December, with its dominance dwindling to just 1.23%, a significant drop from its peak of 2%.
The lack of significant purchases by major players reinforces the notion that a price bottom might still be distant.
Moreover, Dogecoin’s recovery is contingent on a broader market upturn, but the prevailing uncertainty in the market is adding further instability to an already volatile asset.
In addition, the collective market cap of meme coins reached a peak of $72 billion, but it has since decreased by 2%, resulting in a $2 billion loss in valuation.
This trend suggests that investors are shifting their focus towards short-term gains rather than holding onto assets for an extended period. Considering these factors, the outlook for DOGE appears increasingly pessimistic.
If the current circumstances persist, Dogecoin might need to seek out another support level, potentially dipping below $0.23.