Why did Dogecoin price drop today?

Dogecoin (DOGE) has entered a minor correction after an impressive 48% rally in early October. As of October 23, Memcoin was down more than 9.5% from the local high of $0.149 set two days ago.

This includes a 6.5% decline over the past 24 hours, which brought DOGE’s price to $0.135, its lowest in a week. This decline appears to have been driven by profit-taking, with selling pressure increasing as risk aversion increases among investors.

DOGE turns “overbought” and falls.

The price of DOGE started falling after the daily Relative Strength Index (RSI) reading crossed 70. This is the threshold that typically indicates “overbought” conditions and is ahead of a period of correction or consolidation.

In other words, it is highly likely that traders expected the price to peak in the short term and began taking profits. DOGE’s bearish reaction to an overbought RSI is consistent with previous instances where RSI crossed above 70, triggering a sharp price correction.

For example, the price of DOGE fell 23.50% in late September after the daily RSI entered overbought territory.

Dogecoin price falls due to golden cross fractal.

Dogecoin’s continued price decline is consistent with the outlook for the major exponential moving average (EMA) to form a golden cross, an event that coincides with larger price declines in recent months.

A golden cross occurs when an asset’s short-term moving average crosses its long-term moving average. Crossovers are generally considered bullish signals that indicate the potential for a continued upward trend.

However, in the case of Dogecoin, the golden cross did not immediately lead to purchases. Instead, expectations of a crossover often spur early buying activity, creating overbought conditions.

This appears to be happening again, as the previous 50-200 EMA golden cross formation in November 2023 and December 2022 was followed by price declines of approximately 18.5% and 13.8%, respectively.

As of October 23, DOGE’s 50-day EMA is nearing the intersection with the 200-day EMA, helped by a 48% surge earlier this month. However, as the golden cross approaches, early buyers are securing profits, which is likely to contribute to a continued decline.

If the selling continues, DOGE’s downside target for November will likely be its moving average, which is currently around $0.111.

Demand for MEMCOIN decreases due to rising US yields

Dogecoin’s continued price decline coincides with a surge in U.S. Treasury yields, reducing the risk of a recession and increasing the likelihood that the Federal Reserve will slow the pace of interest rate cuts in the coming months.

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On October 23, the yield on two-year Treasury bonds exceeded 4%, the highest in two months, and the yield on the benchmark 10-year maturity hit 4.24%, the highest in three months.

Rising yields generally reflect improving economic conditions, which may reduce investor appetite for “riskier” assets such as cryptocurrencies, including Dogecoin. As a result, DOGE faces downward pressure as the opportunity cost of holding safer, higher-yielding assets increases in the near term.

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.