Dogecoin price is in a bear market: how low can DOGE fall?

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As a seasoned analyst with over two decades of experience in the financial markets, I have witnessed numerous market cycles and trends – from the dot-com bubble to the 2008 financial crisis, and now the crypto revolution. The current plunge in Dogecoin (DOGE) is a stark reminder that even the most resilient coins are not immune to market volatility.

The cost of Dogecoin has plummeted significantly due to an increase in selling, which swept through the cryptocurrency market after the Federal Reserve made a more aggressive interest rate stance.

Over the past five days, the value of Dogecoin (DOGE) has fallen significantly, hitting a bottom not seen since November 11th. This downward trend has resulted in a near 45% decrease from its highest point this month, placing it firmly within a severe downturn, or “bear market.

The decline in Dogecoin could be attributed to escalating anxiety within the cryptocurrency market, causing a wave of frantic sales by investors. Due to its high volatility, the crypto market is primarily driven by retail investors who tend to have brief investment periods.

The drop in DOGE’s value indicates it may be in the markdown stage according to the Wyckoff Method, having previously spent several weeks in the distribution phase. The Wyckoff approach categorizes asset movements into four stages: accumulation, uptrend (markup), downtrend (distribution), and downtrend continuation (markdown).

In the context of Dogecoin, an accumulation period took place from April to November, characterized by minimal price changes. Subsequently, a surge phase ensued due to increased demand over supply, resulting in a steep upward trend. The distribution phase was marked by prices becoming more stable as savvy investors started to sell off. Currently, we’re experiencing a situation where the supply outweighs demand, causing some to panic-sell (in markdown).

As a researcher examining the factors influencing Dogecoin’s recent decline, I’ve noticed that skepticism surrounding Elon Musk’s Department of Government Efficiency initiative might be playing a role. Musk, along with Vivek Ramaswamy, are advocating for significant cuts in government spending, aiming to save over $2 trillion through strategies such as mass layoffs. However, experts question the feasibility of these changes within the government due to substantial regulatory and political hurdles. This skepticism could be causing uncertainty, potentially impacting investor confidence in Dogecoin.

Dogecoin price analysis: How low can DOGE fall?

The Dogecoin price reached a high of $0.4853, which is significant because it’s close to an overextension point identified by the Murray Math lines indicator. Since then, it has fallen beneath both the robust support level from a pivot release and the 50-day moving average.

The accumulation/distribution indicator points downward, signaling ongoing distribution.

The important point to keep an eye on next is approximately $0.2293, which marked the highest peak in March. This level also coincides with the flat line that forms part of the “cup and handle” chart pattern.

If the price of DOGE dips slightly under $0.2293, it might boost the chances that the cryptocurrency could descend to a significant turning point around $0.1953 – roughly 30% lower from its current value.

Investors need to exercise caution as a temporary price increase in a struggling asset might just be a false recovery, often referred to as a “bounce back from a dead cat.” This phenomenon happens when a falling asset experiences a short-term price rise before continuing its decline.

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2024-12-20 17:06