The Dogecoin price tumbled to the lowest level since 1st September as cryptocurrency prices made a sharp U-turn on Tuesday. The DOGE token slumped from this week’s high of $0.3200 to $0.2782. The 12% drop was among the deepest among cryptocurrency majors like Bitcoin and Ethereum.
Why is DOGE slumping?
Dogecoin is a relatively popular cryptocurrency among retail traders and big investors like Elon Musk. The currency, which was developed as a joke, is mostly used in enabling peer-to-peer transactions between people. Still, like Bitcoin, most of the DOGE in circulation are held by investors, who hope that its price will keep rising.
Dogecoin is one of the best performing cryptocurrencies in the market today. Its price has risen by more than 4,900% this year. This trend has propelled its total market capitalization to more than $37 billion and made it the 8th biggest cryptocurrency in the world. At its peak, Dogecoin was the fourth biggest coin after Bitcoin, Ethereum, and Binance Coin.
The Dogecoin price is slumping today as investors rush to take profit as cryptocurrency prices staged a remarkable comeback in the past few weeks. The trigger for the sell-off is Bitcoin, whose price has slumped by more than 5% from its highest level today. Bitcoin declined sharply after El Salvador bought its first tranche of the coin.
The performance of Bitcoin is important for Dogecoin because of the overall correlation that exists between cryptocurrencies. In most cases, altcoins like DOGE, Ether, and ADA tend to drop when Bitcoin falls and rise when it rises. So, what next for the DOGE price?
Dogecoin price prediction
A closer look at the daily chart shows several things. First, the volume of the coin during the current wave has been relatively lower than during the first wave that happened between January and May. This is a risky situation for DOGE since it signifies that only a few traders are participating.
Second, we see that the Dogecoin price formed a double-bottom pattern at $0.1680, which was the lowest level on June 22 and July 22. A double-bottom pattern is one of the most reliable bullish patterns.
Third, the coin has managed to move above the 25-day and 50-day exponential moving averages (EMA). Most importantly, we see that the coin’s upward trend has lost momentum.
Therefore, in my view, I suspect that the DOGE price will soon retreat unless volume rises. If this works, the next key level to watch will be at $0.25.
If you’re interested in investing in DOGE, check out our guide on how to buy Dogecoin online.
