The price of Dogecoin has had a tough performance in recent months. It has crashed more than 66% this year as other cryptocurrency prices crashed. In total, it has lost more than 92% of its value from its all-time high. As a result, the total market cap has crashed to over $7.7 billion.
Why has DOGE lost its momentum?
Dogecoin is a meme coin that gained huge popularity in 2021 after Elon Musk approved it. His endorsement was notable as Musk is the richest person on Earth with a net worth of more than $200 billion.
He is also known as a visionary who helped start some of the largest companies in the world such as Tesla, SpaceX and PayPal. As such, when he underwrites something, investors listen. As a result, Dogecoin has fallen from obscurity to become one of the largest cryptocurrencies in the world.
The price of Dogecoin has been on a downward trend this year as investors have focused on the changing macro situations. First, after flooding the market with money in 2021, the US government has failed to provide a major stimulus this year. As such, liquidity in the market has almost dried up.
Second, the DOGE price fell due to rising inflation in the United States and around the world. Data released last week showed that headline inflation for consumers and producers remained at its highest point in more than 4 decades.
As a result, the Federal Reserve has implemented several rate hikes. Indeed, analysts expect the bank to raise interest rates by 75 basis points this year. Historically, assets like Dogecoin tend to underperform during a period of high interest rates.
Third, the Dogecoin price has fallen due to the declining demand in the market. The number of people buying and selling cryptocurrencies has fallen, as evidenced by the weak performance of companies like Coinbase and Cash App.
Dogecoin price prediction
So, is Dogecoin a good investment? Looking at the daily chart, we see that the DOGE price has been in a bearish trend for the past few months. As a result, the coin has slipped below the 25 and 50 day moving averages.
A closer look reveals that the coin has formed a head-and-shoulder pattern. The current price is close to the neckline of this pattern. In technical analysis, an H&S pattern is usually a bearish sign.
Therefore, there is a good chance that the currency will continue to fall in the coming months. If this happens, the next key support level to watch is $0.050, which is 15% below the current level. A decline below this support will cause it to continue to decline in the near term.
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