Dogecoin price has had a difficult performance in the past few months. It has crashed by 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, its total market cap has crashed to more than $7.7 billion.
Why has DOGE lost its momentum?
Dogecoin is a meme coin that became extremely popular in 2021 after Elon Musk endorsed it. His endorsement was notable since 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 to start some of the biggest companies in the world like Tesla, SpaceX, and PayPal. As such, when he endorses something, investors listen. As a result, Dogecoin moved from obscurity to become one of the biggest cryptocurrencies in the world.
Dogecoin price has been in a downward trend this year as investors have focused on the changing macro situations. First, after flooding the market with money in 2021, the American government has not offered any major stimulus this year. As such, liquidity in the market has nearly dried up.
Second, the DOGE price dropped because of the soaring inflation rate in the United States and around the world. Data published last week showed that the headline consumer and producer inflation remained at the highest point in over 4 decades.
As a result, the Federal Reserve has delivered several rate hikes. Indeed, analysts expect that the bank will hike interest rates by 75 basis points this year. Historically, assets like Dogecoin tend to underperform in a period of high-interest rates.
Third, the Dogecoin price has fallen due to the falling demand in the market. The number of people buying and selling cryptocurrencies has fallen as evidenced by weak performance by companies like Coinbase and Cash App.
Dogecoin price prediction
So, is Dogecoin a good investment? Turning to the daily chart, we see that the DOGE price has been in a bearish trend in the past few months. As a result, the coin has moved below the 25-day and 50-day moving averages.
A closer look shows that the coin has formed what looks like a head and shoulders 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 likelihood that the coin will continue falling in the coming months. If this happens, the next key support level to watch will be at $0.050, which is 15% below the current level. A drop below this support will see it continue falling in the near term.
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