Dogecoin Deflates: What’s Behind The 20% Price Drop Amidst Memecoin Mania?
April 05 2024 - 6:21AM
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Dogecoin (DOGE), the Shiba Inu-themed memecoin, finds itself in a
curious situation. While the number of holders and overall interest
in DOGE surges, its price has experienced a significant drop in the
past week. This inconsistency reflects the broader volatility of
the memecoin market, currently experiencing an influx of novice
traders. Related Reading: Trouble Ahead? Binance Coin Futures
Market Under Pressure With Negative Funding Rates IntoTheBlock, a
blockchain analytics firm, revealed a record number of addresses
holding memecoins for less than a month in March. This trend
suggests a surge in new investors drawn to the memecoin craze.
However, Dogecoin, despite leading the pack in terms of both
traders and transactions, has seen its price tumble by over 20% in
the last week. DOGE Technical Signs Grim? Technical indicators
paint a concerning picture for DOGE’s immediate future. The Chaikin
Money Flow (CMF), which measures buying and selling pressure, has
dipped below zero, indicating an outflow of capital and a bearish
sentiment. Source: IntoTheBlock Related Reading: XRP Battle Cry:
Must Rally 70% To Reconquer $1 Peak After Market Turmoil On the
other hand, the On-Balance Volume (OBV), reflecting buying pressure
over time, has also declined, further confirming a downtrend. This
combination of falling prices and declining trading volume could
exacerbate the drop and weaken DOGE’s support levels. DOGE market
cap currently at $24.6 billion. Chart: TradingView.com Optimism
Lingers For Memecoin Meanwhile, cryptocurrency analyst Trader Mayne
remains bullish on DOGE. He believes the memecoin could experience
a significant price increase if it can hold its current support
levels. However, Mayne’s prediction hinges on DOGE’s ability to
defy the current bearish technical indicators. $DOGE Big spot here
for Doge imo. Bulls really want this area to hold, I think losing
support here opens the door for a much larger correction. RR skewed
positively for longs, if we hold and can reclaim that old high the
party continues. pic.twitter.com/HgSX60XuXv — Mayne (@Tradermayne)
April 3, 2024 The broader cryptocurrency market sentiment also
plays a crucial role in influencing individual coin prices. If the
overall market experiences a correction, it could drag DOGE down
further. Additionally, regulatory scrutiny or negative news
surrounding memecoins could dampen investor confidence and lead to
a sell-off. Dogecoin finds itself at a crossroads. While new
investors are pouring in, fueled by the memecoin craze, the recent
price drop and bearish technical indicators raise concerns about
its short-term future. The decisions of existing holders, the whims
of social media, and the overall cryptocurrency market sentiment
will all be crucial factors in determining whether DOGE can defy
the odds and reclaim its former glory. Featured image from Pexels,
chart from TradingView
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