The Dogecoin price plunged to its lowest level since Sept. 1 as cryptocurrency prices made a sharp reversal on Tuesday. The DOGE token plunged from this week’s high of $0.3200 to $0.2782. The 12% drop was one of the steepest among major cryptocurrencies like Bitcoin and Ethereum.
Why did DOGE fall so much?
Dogecoin is a relatively popular cryptocurrency among small traders. Elon Musk had also famously taken an interest in it. Originally developed as a joke, the currency is mainly used for peer-to-peer transactions. However, like Bitcoin, most of the DOGE in circulation is in the hands of investors hoping to see its price rise.
Dogecoin is one of the best performing cryptocurrencies in the market today. Its price has increased by more than 4,900% this year. This trend has pushed its total market capitalization to more than $37 billion, making it the 8th largest cryptocurrency in the world. At its peak, Dogecoin was the 4th largest coin after Bitcoin, Ethereum, and Binance Coin.
The Dogecoin price is plummeting today as investors look to take profits after the remarkable comeback in cryptocurrency prices in recent weeks. The trigger for the selloff is Bitcoin, whose price has plunged more than 5% from its peak today. Bitcoin has fallen sharply after El Salvador bought its first tranche of the coin.
Bitcoin’s performance is important to Dogecoin because of the general correlation between cryptocurrencies. For the most part, altcoins like DOGE, Ether, and ADA tend to fall when Bitcoin falls and rise when it rises. So what’s next for the DOGE price?
Dogecoin Price Forecast
a closer look at the daily chart shows several things. First, the volume of the coin during the current wave was relatively lower than during the first wave, which took place between January and May. This is a risky situation for DOGE as it means few traders are involved.
Secondly, we see that the Dogecoin price has formed a double-bottom pattern at $0.1680, the low of June 22 and July 22. A double bottom pattern is one of the most reliable upside patterns.
Third, the coin has managed to move above the 25-day and 50-day exponential moving average (EMA). Most importantly, the coin’s uptrend has lost momentum.
As a result, I suspect that the DOGE price will soon decline unless volume picks up. If this is the case, the next important level to watch will be $0.25.