Why is Dogecoin price down today?
2024.10.23 08:33
Dogecoin (DOGE) has entered a minor correction following its impressive 48% rally earlier in October. As of Oct. 23, the memecoin has dropped over 9.5% from its local high of $0.149 established two days ago.
DOGE/USD four-hour price chart. Source: TradingView
That includes a 6.5% decline in the last 24 hours, which has brought DOGE’s price down to $0.135, its lowest in a week. The pullback appears to be driven by profit-taking, with increasing risk-off sentiment among investors adding to the selling pressure.
DOGE drops after turning “overbought”
DOGE’s price started dropping after its daily relative strength index (RSI) reading crossed above 70, a threshold that typically signals an “overbought” condition and precede a period of correction or consolidation.
In other words, traders likely began securing profits, anticipating that the price had peaked in the short term. Their bearish response to DOGE’s overbought RSI is consistent with previous instances when the RSI crossed above 70, triggering sharp price corrections.
DOGE/USD daily price chart. Source: TradingView
For instance, DOGE’s price dropped by 23.50% in late September after its daily RSI entered the overbought zone.
Golden cross fractal hurts Dogecoin price
Dogecoin’s ongoing price drop coincides with the prospects of its key exponential moving averages (EMA) forming a golden cross, an event that has coincided with larger price drops in recent months.
A golden cross occurs when an asset’s short-term moving average crosses above the long-term moving average, a crossover seen typically seen as a bullish signal indicating the potential for a sustained uptrend.
However, in Dogecoin’s case, golden crosses have not led to immediate buying. Instead, anticipation of the crossover often drives early buying activity, creating overbought conditions.
DOGE/USD daily price chart. Source: TradingView
This seems to be playing out again, as previous 50-200 EMA golden cross formations in November 2023 and December 2022 were followed by price declines of roughly 18.5% and 13.8%, respectively.
As of Oct. 23, DOGE’s 50-day EMA is approaching a crossover with the 200-day EMA, driven by its 48% surge earlier this month. However, with the golden cross nearing, early buyers are likely locking in profits, contributing to the ongoing pullback.
Should the selloff continue, DOGE’s downside target for November will likely be its moving averages, currently at around $0.111.
Rising US yields saps appetite for memecoins
Dogecoin’s ongoing price decline aligns with a surge in US Treasury yields, signaling diminishing recession risks and raising the likelihood that the Federal Reserve may slow its pace of interest rate cuts in the coming months.
Related: Bitcoin ETF $79M outflow ends 2-week bull run amid ‘sideways’ BTC price
On Oct. 23, the two-year Treasury yield climbed above 4%, its highest level in two months, while the benchmark 10-year yield reached 4.24%, a three-month peak.
US 10-year vs. 2-year Treasury yields daily performance chart. Source: TradingView
Rising yields typically reflect improved economic conditions, which can reduce investor appetite for “riskier” assets like cryptocurrencies, including Dogecoin. As a result, DOGE has faced downward pressure as the opportunity cost of holding safer, yield-bearing assets rises in the short term.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
