Should you buy Dogecoin?
Dogecoin price has been in a consolidation phase in the past few days. DOGE was trading at $0.060 where it has been in the past few days. It has fallen by more than 64% this year, making it one of the worst-performing big-cap coins.
Why is DOGE crashing?
Dogecoin has been in a bearish trend as investors worry about multiple things, including high-interest rates and low demand. This decline is in line with that of other cryptocurrencies like Bitcoin and Ethereum.
The Federal Reserve has embraced an extremely hawkish tone this year. It has hiked interest rates by 300 basis points this year. At the same time, the bank has decided to implement quantitative tightening (QT) policies by reducing its balance sheet.
Historically, risky assets like Bitcoin and Dogecoin tend to underperform in periods of high-interest rates. This also explains why American indices like the Dow Jones and the Nasdaq 100 have plunged as well.
Meanwhile, Dogecoin has crashed because of soaring inflation. Data published last Wednesday showed that the headline consumer price index (CPI) remained at an elevated level in September. This increase was bigger than what analysts were expecting.
As a result, analysts believe that the Federal Reserve will continue hiking interest rates in the coming months. Precisely, they expect that the bank will hike rates by 75 basis points in November and by 50 basis points in December.
DOGE price has also declined because of the falling demand. As you recall, Dogecoin had a strong performance in the first part of 2021 after the endorsement by Elon Musk. Recently, however, Elon Musk has remained muted about Dogecoin. And when he talks, the coin has often reacted mildly. On-chain data shows that Dogecoin activity has been relatively muted in the past few months.
Dogecoin price prediction
Should you buy Dogecoin? The daily chart shows that DOGE price has been in a tight range in the past few weeks. In this period, the coin has moved below the 25-day and 50-day moving averages. A closer look shows that it has formed a head and shoulders pattern. In price action analysis, a H&S pattern is usually a bearish sign.
The Relative Strength Index (RSI) has moved slightly below the neutral point. Therefore, Dogecoin will likely have a bearish breakout as sellers target the next key support level at $0.050. A move above the resistance at $0.065 will invalidate the bearish view.
How to buy DOGE
eToro
eToro offers a wide range of cryptos, such as Bitcoin, XRP and others, alongside crypto/fiat and crypto/crypto pairs. eToro users can connect with, learn from, and copy or get copied by other users.
Comments are closed.