Yerevan (CoinChapter.com) – Dogecoin (DOGE) fell victim to the ubiquitous crisis on the crypto market, but the recovery is still nowhere in sight. CoinChapter curates three key reasons why the meme cryptocurrency faces the prospect of crashing further in the upcoming sessions.
#1 Looming Death Cross
Dogecoin could form a Death Cross on its daily chart.
The technical indicator occurs when an asset’s short-term moving average drops below its long-term moving average. Statistically, the crossover alerts about the beginning of bearish phases.
Dogecoin’s 20-day exponential moving average (20-day EMA: blue wave on the chart) exhibits a bearish tendency as it closely approaches the 50-day simple moving average (50-day SMA-50; red wave) for a potential crossover to the downside. Should the death cross appear, the meme token could face further losses. Bitcoin, the top cryptocurrency, has already logged the same 20-50 crossover lately, following up with a price crash.
#2 Musk Hype Is Over
Tesla and SpaceX Elon Musk CEO caused played a significant role in the latest crypto crisis.
After announcing Tesla’s U-turn on Bitcoin payments for their vehicles, the billionaire entrepreneur hinted at his willingness to dump Tesla’s Bitcoin holdings ($1.3 billion worth). Even though he didn’t eventually pull the trigger, the hint alone was enough to send Bitcoin (BTC) price into a downward spiral.
The flagship cryptocurrency’s decline also sent its rivals down with the ship. Dogecoin was one of the victims, despite Musk’s attempts to retrieve the losses. He tweeted about Doge being faster and more efficient than Bitcoin and was heavily criticized on social media platforms for his “lack of understanding” of how blockchains actually work.
After Vitalik Buterin, the co-founder of Ethereum — the second-largest cryptocurrency, called the CEO’s approach ‘fundamentally flawed‘, he once again replied with a Doge tweet.
The upcoming sessions will tell if Musk’s tweets have the desired effect on the token investors. However, Dogecoin traded at $0.308 in the early London session Monday, exhibiting a pronounced bearish sentiment. It lost over 50 percent since the decline initiated on May 7.
Moreover, another technical indicator hinted at a bearish future for Doge.
#3 The Retracement Target for Dogecoin
On the Dogecoin chart presented below, the starting point of the downside progression was at the $0.69 price margin. The token now holds the 78.6% retracement level as support — at $0.531. A breakdown below the price floor risks sending the price to near $0.14, a level that coincides with the 100% Fib line.
That would mean another 50 percent drop if the prediction pans out.
The Fibonacci retracement levels alone are not enough to predict the upcoming price with any certainty. However, combined with the overall climate on the market and other technical indicators, the possibility of Doge going bearish despite the efforts from the “Dogefather.”
Bitcoin has already crossed all imaginable support levels as it dropped below the 200-day moving average. Considering the overall devastation in the altcoin sector, the same could happen to Doge.