Why DOGE and Crypto Are Down Today
Dogecoin may have woofed too early, and its go at above $0.25 didn’t go the way holders expected. The memecoin is down by 4.62% over the last 24 hours, adding weight to a weekly downtrend of negative 5.8%.
$DOGE has now entered a bearish zone on a per-month performance, now trading at a slight step past breakeven at minus 1.8%.
But what gives?
Macro, After All
This negative performance can hardly be attributed to Dogecoin itself. After all, DOGE has been a good boy in recent months—and promises of ETF listings and institutional treasuries based on the memecoin add weight to its long-term potential.
What is likely happening right now is that we are in the midst of a full-blown market correction. Bitcoin dipped past $110,000 once again, reflecting a growth in risk-off sentiment. Ethereum and Cronos, two altcoins that had been leading the charts in momentum, also fell flat today, losing 6% and 14.86%, respectively.
Today’s PCE report showcased that, while inflation came in as expected, fears that the U.S. will enter stagflation— that is, a period of stubborn inflation while economic growth and job creation are flatlined—are back in conversation.
Macroeconomics is also affecting digital assets due to recent developments in the tariff wars. The U.S. recently lifted a tax exemption on imported goods worth less than $800, which could trigger a wave of price hikes on consumer goods.
Profit-taking has certainly also come into play this week. After last week’s dovish statement by Fed Chair Jerome Powell, altcoins rallied as investors weighed in on the potential for lower interest rates. And now, the sudden risk-off sentiment may have led the majority of traders to close their positions, while some had their trades closed for them.
The Bull Hunt of August 29
Over 100,000 traders were caught off guard during the market correction, leading to substantial liquidation losses today. CoinGlass registers over half a billion in liquidations on August 29, of which over 75% are made up of long positions. The largest single liquidation happened on OKX, on a BTC-USDT perpetual swap contract.
Ethereum led the trend with $191 million in liquidations, while BTC trades registered $120 million in losses. As for Dogecoin, the memecoin saw $10.7 million of liquidations on August 29, of which $9.74M consisted of long positions.
Dogecoin Landing Zone
After a solid beatdown by the bears, the question now becomes, where will Dogecoin find a home so buyers can lick their wounds? In last Friday’s Dogecoin weekly review, we talked about how the price lost some momentum after nearing the $0.24 zone, arguably Dogecoin’s strongest resistance throughout the year.
And while the leader of memecoins attempted to go past that zone two times following the article, selling momentum eventually took control. This led to a harsh drop back to near twenty-cent levels. Currently, $DOGE trades at $0.2145—as buyers appear to have found a landing zone near that margin.
On the four-hour chart, the two latest candles as of the time I’m writing this have shrugged the possibility of going below $0.2121, potentially indicating that this is as far as buyers are willing to go.
The relative strength index indicator corroborates this, showing that the RSI line has completely flatlined over the past eight hours, indicating that selling momentum has either exhausted itself—or just stopped to take a breath.
If selling momentum eventually continues, another 3% drop to $0.2006 is the most likely scenario. However, if sellers really are done, even then bulls would need to up the ante to come up with significant buying pressure.
Dogecoin’s saving grace would likely come as new developments of institutional adoption arrive next week. Or if the overall cryptocurrency market picks back up momentum, money could certainly flow back into the memecoin.
Looking ahead a few weeks, there’s good reason to be somewhat optimistic about its chances, however. Aside from the aforementioned rate cut that will likely take place in mid-September, several ETF decisions are coming to their deadline in October, raising the chances of a DOGE ETF approval by then.
