Dogecoin price has experienced a decline for two consecutive days as sentiment in the cryptocurrency industry deteriorated.
On January 8, Dogecoin (DOGE), the largest meme coin in the crypto market, dropped by 6%, reaching a low of $0.3415, which is its lowest level in nearly a week.
This decline occurred amidst high trading volume, with tokens worth $5.26 billion being exchanged, compared to Tuesday’s $3.3 billion. The increase in trading volume suggests that some investors have started to sell off their positions.
The drop in Dogecoin’s price has led to a significant increase in liquidations. On Tuesday, bullish positions worth $20 million were liquidated, followed by nearly $15 million on Wednesday. These liquidations represent the largest since December 19. When large liquidations occur, it often leads to a sharp price drop as leveraged bullish trades are automatically closed by exchanges.
Further data indicates that Dogecoin’s weighted funding rate remained positive, indicating a reduced demand for long positions. This also reflects increased caution as cryptocurrency prices retreat amidst the soaring US bond yields.
The likelihood of the Securities and Exchange Commission (SEC) accepting a DOGE ETF this year remains low. According to Polymarket, the odds of this happening fell by 13% to 36% on Wednesday.
However, some analysts still anticipate a potential bounceback in Dogecoin’s price. As we mentioned earlier, Bitcoin, which often influences the broader crypto market trends, is currently in a strong bull market and has formed a bullish pennant pattern, typically indicating further gains.
In a post on X, KrissPax highlighted that DOGE’s current price action resembles previous patterns observed in 2023 and 2024. He pointed out that the coin experienced a rally in November 2023, followed by a drop, a consolidation phase, and a subsequent recovery in 2024.
Dogecoin’s price analysis reveals that it has retraced over the past few weeks, falling from a December high of $0.4830 to $0.34. Despite the decline, it remains above the 38.2% Fibonacci retracement level and the 50-day and 100-day moving averages.
The Percentage Price Oscillator indicator has turned bullish, with its histogram staying above the zero line.
Considering these factors, it is likely that DOGE will stay within this range before potentially rebounding to last year’s high of $0.4830 in the current quarter. Such a move would represent a 43.50% increase from the current level. However, in a bearish alternative scenario, the coin could drop to $0.2630, the low of December 20.