Memecoin craze drives Dogecoin 15% higher, confirming the return of risk-on sentiment

YEREVAN (CoinChapter.com) – Dogecoin (DOGE), the alpha dog of all things meme, rallied 15% on Aug 16, retesting a significant resistance at $0.088. As a result, the bullish momentum subsided, and DOGE corrected downward, trading at $0.084 on Aug 17. Will the meme coin get another push?

DOGE charts indecisive

As CoinChapter previously reported, Dogecoin daily chart suggested that the token defied a bearish pattern and broke resistance on Aug 14. The pattern in question, dubbed ‘ascending triangle,’ promised to take DOGE down to $0.038. But the meme coin retaliated, albeit exhibiting signs of slowing down.

A closer look at the hourly chart revealed that the digital asset traded within a ‘bull flag’ on Wednesday. The latter represents an accumulation channel that forms after a sharp uptrend. It takes the price slightly lower before initiating a new upward kick. The flag forecasts another bullish move to $0.1 in the upcoming session.

Meanwhile, the trading volumes disagree.

They have declined since the bear flag formed, indicating insufficient bullish incentive among DOGE buyers. Moreover, the relative strength index (RSI) joined the skeptical side and printed flat highs instead of following the price action’s higher highs. The said divergence typically signals a looming decline.

What propelled Dogecoin?

One of the factors behind the Dogecoin rally was the launch of DogeChain, seemingly a “layer 2” for the meme coin’s DeFi, NFTs, and games. However, it is not a layer-2 in the ‘conventional sense,’ and Dogecoin developers are not involved in the project. Instead, it’s a separate network based on Polygon Edge.

Moreover, a Dogecoin representative confirmed that the new blockchain has nothing to do with the alpha meme coin or its developing team.

We generally don’t comment on these things publicly because it tends to only amplify attention, but multiple PR/media sites are reporting or insinuating that Dogecoin launched this token or its test network or is closely affiliated with it. This made it necessary to clarify.

commented the developer.

Intentional or not, the news helped DOGE climb 15% intraday. However, given the short-lived nature of the hype, the token price could follow shortly.

Meme coins march a bullish sentiment.

Despite meme coins being disregarded as ‘jokes’ in the crypto sphere, they can signal bullish sentiment on the market. For example, Dogecoin and its pup Shiba Inu rallied double digits, and crypto analyst Mile Deutscher asserted the rally could have “broader implications.”

The analyst admitted that meme coins are essentially a “casino,” but they are a “crucial component of the crypto economy, and shouldn’t be underestimated.”

Also, as meme coins are generally associated with higher risk, even by crypto standards, a collective meme rally could signify retail investors’ readiness to gamble.

The latter would mean a stronger sentiment for the rest of the crypto market, including Bitcoin and Ethereum.