The price of Dogecoin (DOGE) fell today, which reflects other trends in the cryptocurrency market.
Why did Dogecoin price drop today?
On November 28, the price of DOGE fell more than 3.5% to $0.076, underperforming the cryptocurrency market, which fell about 1.25% during the same period. Memecoin’s price drop is part of a broader correction that has seen it fall nearly 12.5% in over a week.
Let’s take a closer look at the most likely reasons behind Dogecoin’s recent withdrawal.
bearish divergence
Dogecoin’s decline today comes ahead of a period of growing bearish divergence between its price and key momentum indicators.
In particular, between October 6 and November 17, the price of DOGE rebounded and made higher highs. However, during the same period, the daily relative strength index (RSI) decreased and its high point also lowered.
According to the principles of technical analysis, the difference between a rising price and a falling RSI indicates a weakening of the prevailing uptrend, allowing traders to lock in profits at the local highest price.
Bitcoin dominance rises
Dogecoin’s price decline today is part of a broader decline in altcoin market share relative to Bitcoin (BTC).
Notably, the Bitcoin Dominance Index, which measures the market share of top cryptocurrencies relative to the total weight of all altcoins, is up 0.83% over the past 24 hours. Simply put, traders swapped capital from altcoins to Bitcoin.
In contrast, Dogecoin’s market dominance over the rest of the cryptocurrency market decreased by more than 1% on November 28.
psychological resistance
Dogecoin’s price decline today appears to be the result of a bearish rejection by one of the strongest distribution areas.
Notably, DOGE’s price reversed after retesting the 0.236 Fib line as resistance near $0.081. Attempts to liquidate above this price level since May 2023 have failed, as shown below.
As a result, it is likely that DOGE will continue its downward trend in December 2023, with its 50-day exponential moving average (50-day EMA, red wave) close to $0.072, acting as a key downside target.
DOGE Whale FOR SALE
The decline in the price of Dogecoin coincides with a decrease in the supply of DOGE held by the wealthiest investors.
In particular, the supply controlled by Dogecoin addresses holding 100 million to 1 billion DOGE tokens (green wave) has decreased by almost 1% over the past two weeks. Interestingly, the supply of the next group, those holding more than 1 billion DOGE (black waves), increased by 0.5% over the same period.
The cluster of over 1 billion DOGE balances may include addresses associated with cryptocurrency exchanges and OTC trading desks, indicating that whales have transferred their Dogecoins to such platforms for selling purposes.
Is the Dogecoin bull market over?
From a technical perspective, DOGE should break the upper trendline of a typical descending triangle setup. If this bullish scenario plays out, the price could reach the September 2022 resistance of $0.10 by the end of 2023.
However, bears will attempt to push DOGE/USD down 25% to $0.056 by the end of the year, and if the price falls below the triangle’s lower trendline, it could possibly fall 70% to $0.023 in the first quarter of 2024.
Related: YOLO Director Invests $4M of Netflix Budget into Dogecoin, Earns $27M: Report
A descending triangle that forms during a downtrend is considered a bearish continuation setup. This pattern is resolved when the price breaks below the lower trend line and falls by the maximum distance between the upper and lower trend lines.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.