Dogecoin, the popular meme-inspired cryptocurrency, has seen its price decline significantly in recent weeks. The self-proclaimed “fun and friendly internet currency” is down over 75% from its all-time high of $0.73 in May 2021. This prolonged crash begs the question – what’s causing the Dogecoin downturn?
According to crypto analyst Rekt Capital, Dogecoin is still trading below the key support level of $0.06 which has now become resistance. This indicates bearish sentiment and lack of buying pressure.
Rekt Capital points out that the potential bullish divergence signaled by the RSI earlier is also no longer valid. This divergence would have suggested gathering upside momentum despite the downtrend. However, Dogecoin’s failure to reclaim the previous lower low support level has invalidated this bullish signal.
Source: Rekt Capital
Overall, Rekt Capital notes that macro conditions haven’t changed much for Dogecoin – it continues to consolidate near the bottom of its trading channel. Unlike previous cycles, the meme coin has so far failed to rebound strongly off the channel bottom at around $0.05.
This lack of bullish momentum is concerning for Dogecoin holders. Without a strong catalyst like Elon Musk tweets which pumped Dogecoin earlier, the meme coin seems unable to reverse its downtrend.
Fundamentally, Dogecoin also lacks active development and real-world utility compared to more promising blockchain projects. This casts doubt on its long-term viability beyond being a speculative asset.
In conclusion, Dogecoin’s extended crash can be attributed to bearish sentiment, lack of buying support and fundamentals. Without a major reversal, the meme coin king’s troubles look set to continue. Investors may want to look beyond hype-driven assets in the current crypto winter.
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