Dogecoin breaks $0.13 after BTC boost, but can it avoid a reversal?

DOGE has capitalized on Bitcoin’s breakout, finally pushing above the $0.13 mark after two failed attempts.
To avoid a retracement, one key strategy is essential.

As a seasoned analyst with over two decades of experience in the volatile world of cryptocurrencies, I have seen my fair share of market cycles and trends that can make even the most experienced investors question their strategies. The recent surge of Dogecoin [DOGE] has caught my attention, given its impressive weekly gains and reclaiming a spot among the top 5 cryptos. However, as with every bull run, caution is advised.

Dogecoin (DOGE) is experiencing a powerful resurgence and has once again secured its position among the top five cryptocurrencies, thanks to a 20% increase over the past week. At present, it’s trading at $0.1321, surpassing the $0.13 barrier, a level it hadn’t reached in more than 150 days, after two previous unsuccessful attempts.

Generally speaking, when Bitcoin gets close to a significant value milestone, there’s usually an influx of funds moving towards popular meme coins with large market caps. Dogecoin (DOGE) is one that has clearly profited from this trend.

For the last three days, DOGE has experienced notable daily growth surpassing 7%, fueled by substantial trading activity that hit a high of $3 billion. Yet, there’s a mix of positive and negative developments.

DOGE might be on the brink of a reversal

The surge in trading activity for Dogecoin resembles previous market trends, where Dogecoin saw substantial growth as Bitcoin neared its bullish maximum.

If the current pattern persists, it’s possible that a turnaround might occur quite soon for Dogecoin. This is particularly likely given that excessive market activity could trigger a correction, causing investors with less secure positions to sell off, thereby securing their profits.

The strength of this possible turnaround was also supported by the Relative Strength Index (RSI), which has climbed into overbought territory, as about 83% of the price fluctuations over the last fortnight have been upwards movements.

As an analyst, I’m noticing a rise in the Relative Strength Index (RSI) of DOGE, indicating potential selling pressure might ensue as the current rally starts to taper off.

Source : IntoTheBlock

As noted earlier, Dogecoin has had its most lucrative week, even outpacing BTC in daily gains.

This surge allowed DOGE to break through a historically challenging price range, pushing half a million holders into net profits – particularly those who had been in losses for over three months.

Many investors bought into these positions at an average cost of about 9 cents each, noticeably less than their current values.

Consequently, it’s vital to uphold the $0.13 as a key support level. Should Dogecoin (DOGE) experience a pullback, approximately 60 billion DOGE tokens might enter the market, potentially intensifying the selling pressure.

While there could potentially be further advancements, the current progress may not be at its peak yet, considering Bitcoin surpassing $68K. The crucial point now is determining if Dogecoin will ascend to $0.14 or if it has already attained its market ceiling.

The chart below has the answer

Generally speaking, when a market reaches its lowest point, or “bottom,” it often sparks new curiosity among potential buyers, as they see an opportunity to purchase at a lower price. For instance, Dogecoin has been trending downward for approximately 150 days now, touching a low of $0.09.

At this price point, people viewed it as a temporary decrease or “downturn,” which made them eager to purchase DOGE at a reduced cost, anticipating potential profits later on. This sentiment is mirrored in the continuous withdrawal of DOGE tokens from exchanges, reaching an amount of $50 million on the day when the price fell to $0.90.

Source : Coinglass

Given that DOGE surged by 25% this week due to Bitcoin’s rise, it seems plausible that traders might be closing their positions. This is suggested by the ‘green wick’, which indicates outflows in this context.

Read Dogecoin’s [DOGE] Price Prediction 2024–2025

Essentially, the market seems excessively hot, potentially causing a dip for BTC. On the other hand, DOGE might experience substantial growth in the near future as BTC holders consider their next steps, possibly leading to increased DOGE value.

Given the current market conditions, I believe a pullback towards approximately $0.12 could be imminent, rather than anticipating an immediate bullish surge to $0.14.

2024-10-18 17:12

DOGE might be on the brink of a reversal

The chart below has the answer

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