Dogecoin Price Under Pressure Amidst Market Decline

Dogecoin, the world's largest memecoin, is experiencing significant selling pressure due to a broader market downturn. Following a sharp decline on Monday that extended into early Tuesday, DOGE appears to be consolidating.

Dogecoin Price Outlook

On Monday, DOGE fell below its 200-day Simple Moving Average (SMA) at $0.24 for the first time since October 2024. This decline continued into Tuesday, reaching lows of $0.195, representing a loss of over 15% in two days. However, the price has since recovered to approximately $0.2071. Investor activity remains low, with daily trading volume down by 50%.

Previously, $0.24 served as strong support for DOGE. Following the recent price drop, on-chain analysts now identify $0.19 as the key support level. A further decline below $0.19 could increase the probability of a deeper correction towards $0.060. Conversely, a successful rebound above $0.19 and reclaiming the 200-day SMA could signal diminishing selling pressure, potentially leading to a rally towards the 50-day SMA of $0.30, where resistance is expected.

On-Chain Sentiment

Analyst Ali Martinez recently highlighted on X another significant Dogecoin price dynamic: total futures trading volume currently sits at $992 million.

This represents a dramatic decrease from the $58.2 billion recorded in November, indicating a significant shift in market interest or liquidity. Several factors could contribute to this decline, including broader crypto market volatility, waning hype, and traders shifting their focus elsewhere. Dogecoin's next move may depend on its ability to regain this lost momentum.

Some market participants believe the current trend signals the end of the altcoin season, citing substantial declines in other top altcoins since the beginning of the week. The altcoin sector is also still recovering from last week's Bybit attack. Furthermore, broader crypto market volatility, exemplified by Bitcoin's fall below $90,000 (currently trading around $86,735, down 9.8% in the past seven days), adds further pressure.

Rebound or Pullback?

While Dogecoin's recent gains are encouraging some traders, others remain skeptical about its long-term prospects. On-chain data suggests the recent price increase is driven by social media buzz, celebrity endorsements, and retail speculation. Given Dogecoin's volatility and lack of inherent utility, many analysts predict this gain could be short-lived. However, positive developments, such as the approval of a DOGE Exchange-Traded Fund (ETF), could potentially trigger a 50% rally.

The current market situation remains uncertain, making it difficult to determine whether the recent price spike signals a genuine rebound or a temporary surge before another downturn. Despite this uncertainty, Dogecoin's potential to generate market excitement remains evident. Analysts like Tardigrade maintain a positive outlook, noting that DOGE is completing its fourth falling wedge pattern, a formation that previously preceded a 445% rally.

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