Dogecoin (DOGE), the leading cryptocurrency by market capitalization, is showing signs of entering another bullish phase reminiscent of its spectacular rise in early 2021. According to CoinDesk, Dogecoin’s market capitalization is currently around $22 billion, with a date price increase of over -70%, significantly outpacing Bitcoin (BTC)’s nearly 50% gain.
Dogecoin’s ‘Golden Cross’, an important technical indicator, is getting closer to confirmation. This occurs when the 50-week simple moving average (SMA) crosses the 200-week SMA, indicating potential long-term upward momentum. These intersections are often used by momentum traders to pinpoint optimal market entry and exit points.
Historically, Dogecoin experienced a golden cross in early January 2021, which preceded a four-month rally that led to an unprecedented 8,000% price rise, peaking at 76 cents on Binance. However, it is important to approach these indicators carefully as past performance is not always indicative of future results and moving average crossovers can sometimes lag actual market movements.
Moreover, the dynamics surrounding memetic cryptocurrencies like Dogecoin are significantly different from traditional investments. Due to lack of practical real-world application, market movements are mainly driven by speculative trading. This makes them particularly vulnerable to changes in global financial conditions, such as changes in liquidity and interest rates.
During Dogecoin’s 2021 rally, global interest rates were near zero, creating an environment suitable for high-risk investments. However, with US interest rates currently above 5%, the economic backdrop is quite different, potentially impacting the trajectory of speculative assets like Dogecoin.
Investors should remain vigilant, considering both the technical setup and broader economic factors when assessing the likelihood of another major rebound in the Dogecoin price.
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