3 reasons why Dogecoin (DOGE) price is falling on Wednesday

Dogecoin Extends Decline as Crypto Sentiment Sours

Dogecoin resumed its downward trajectory on Wednesday amid a prevailing bearish sentiment in the crypto market.

DOGE witnessed a notable 4% drop on Wednesday morning, mirroring the performance of its peers Bitcoin, Ethereum, and BNB Coin. The cryptocurrency has now plunged nearly 50% from its annual peak and remains 75% below its all-time high. Here are three key factors contributing to its ongoing market decline:

Intensified Competition from Newer Meme Co

Dogecoin has suffered from the rise of competing meme coins, such as Pepe, Dogwifhat, Bonk, and Brent. These tokens have outperformed Dogecoin by leaps and bounds, registering gains of over 200% this year.

This competition is evident in the daily trading volume. According to CoinGecko data, Dogecoin's 24-hour volume was recorded at $585 million, while its market capitalization exceeded $17 billion.

Conversely, Pepe, with a market cap of $4.36 billion, boasted a trading volume of $676 million. Similarly, Dogwifhat logged a 24-hour volume of $587 million. This indicates a growing demand for these newer tokens among traders.

Deteriorating Crypto Fear and Greed Index

Investor sentiment towards cryptocurrencies, including Dogecoin, has taken a pessimistic turn. The widely followed fear and greed index has dipped to the neutral level of 48, down from its year-to-date high of 90.35. Should this trend continue, a shift into the fear zone is highly likely.

Historically, cryptocurrencies and other risk assets experience sell-offs during periods of elevated market fear. This anxiety stems from the absence of significant drivers within the crypto industry.

Technical Patterns Suggest Downward Momentum

Dogecoin's price action has also been influenced by bearish technical patterns. Notably, the coin has been trending towards a "death cross," a technical indicator that occurs when the 50-day and 200-day moving averages intersect. This pattern signifies a potential acceleration of the sell-off.

Moreover, Dogecoin has faced formidable resistance during its previous recovery attempts. In May, it encountered strong resistance at $0.1750, and in June, it repeated at $0.1285. These bearish signals are reinforced by the recent bearish behavior of Bitcoin, which has established a "quadruple top" pattern and has fallen below its 50-day and 100-day moving averages.