Among the various meme-based cryptocurrencies, only a few have managed to maintain positive trends in the last month. Both dog and cat coins have experienced significant drops, falling below key price levels. Even Dogecoin [DOGE], the largest meme cryptocurrency, has not been immune to this downward trend.
However, with the market now showing signs of recovery after a recent decline, even meme coins like DOGE are displaying some positive movements, with DOGE recording an 11% increase from the previous day’s close.
Despite this positive momentum, DOGE still has a considerable journey ahead to recover its losses and return investors to profit.
Strategies for DOGE to Break Out
A careful analysis of the daily price chart indicates clear signs of profit-taking, with DOGE inching closer to the $0.50 mark, a level it has not reached in three years. Many cautious investors chose to sell at this peak.
With the Relative Strength Index (RSI) dropping below 40, there is potential for a rebound. A low RSI often indicates that an asset is oversold, presenting an attractive opportunity for investors to capitalize on the price drop.
However, historical data suggests a need for caution. While DOGE’s RSI falling below 40 has sometimes led to minor upward movements, the coin’s high volatility keeps traders cautious and on their toes.
Dogecoin has historically surged when its momentum aligned with Bitcoin reaching new highs.
Will Bitcoin be the catalyst to push Dogecoin out of its recent two-week consolidation phase? Following a period of consistent downward trends on DOGE’s daily chart, a significant double-digit increase has finally brought some relief.
This uptrend coincides with Bitcoin’s recovery from a recent crash, raising the possibility that the positive momentum could carry DOGE even higher.
Yet, with meme coins like DOGE, situations are rarely straightforward. Despite the allure of a low price, retail investors are displaying signs of exhaustion. The speculative nature of these coins seems to be taking a toll, a development that requires further investigation.
Assessing the Risk
Since mid-November, retail trading of DOGE has slowed down significantly, as major holders retain control of the market, as depicted in the chart below.
The increasing dominance of large stakeholders continues to influence the DOGE market, a pattern previously highlighted here at CryptoCrypto.
However, a notable change is emerging: retail trading activity is diminishing, refocusing attention on DOGE’s weak fundamentals. Therefore, the recent surge may be primarily driven by whales seizing opportunities during the dip rather than a genuine shift in market sentiment.
In the short term, this whale-led buying pressure could propel DOGE towards the $0.40 milestone. However, the real challenge lies beyond that level.
For DOGE to break through to $0.48–$0.50, it will require more than wishful thinking. A combination of bullish Bitcoin trends, renewed retail investment, and reduced whale interference is crucial for this to happen.
If these elements align, DOGE could successfully surpass this barrier. Yet, if they fail to synchronize, investing in this meme coin may continue to pose significant risks.