Dogecoin (DOGE) has dropped sharply, losing more than 8% in 24 hours. The entire memecoin industry is staggering, losing more than $4 billion in market capitalization. Investors are being prudent as security concerns, scams, and declining confidence in the market weigh it down.
While Dogecoin is renowned for its volatility, this recent drop has left eyebrows raised regarding its future. Will it recover, or is this a sign of more losses? Let’s examine the primary reasons why Dogecoin’s price dropped and whether a rebound is on the horizon.
Security Concerns Shaking Investor Confidence on Dogecoin
One of the most significant reasons behind Dogecoin’s recent drop is growing security concerns. There had been reports that implicated North Korea’s Lazarus Group in a string of crypto scams. These scams caused investors to panic, and it has led to widespread selling.
Memecoins like Dogecoin, Shiba Inu, and Pepe rely heavily on hype and trust in the community. Prices fall sharply when trust is lost. Recent frauds have added to fears that the crypto market is becoming riskier.
Investors are thus leaving Dogecoin and other meme coins. This has triggered a domino effect, leading to further price drops.
Weakening Market Sentiment decreasing the price of Dogecoin
Market sentiment plays a big role in the price action of Dogecoin. The sentiment is currently bearish. Fearing to lose money, most investors are selling. Thus, there is more selling pressure.
A few meme coins are suffering tremendous losses:
- Shiba Inu (SHIB): Lost 5.6%
- Pepe (PEPE): Dropped 7.25%
- Bonk (BONK): Lost 7.55%
These drops indicate that the entire meme coin ecosystem is falling. Without high demand, Dogecoin is unable to hold its value.
Slumping Network Activity
Blockchain statistics reveal that adoption of Dogecoin is decelerating. Transactions are fewer, and thus the demand is less, which dampens price support.
Key metrics:
- Large transactions (over $1 million) dropped to 66 in February—a four-month low.
- Transaction volume overall is decreasing, showing declining interest from traders.
The decline in activity is a sign that fewer people are using Dogecoin for payment, transfer, and trade. When demand decreases, prices do too.
Dogecoin is showing Bearish Market Indicators
Market indicators are that Dogecoin is in a precarious position. Open interest (OI), or active futures contracts, has fallen dramatically.
- OI is at $2.21 billion, down from $5.42 billion a month ago.
- Funding rates are positive at 0.0315%, but far less than the December 2024 high of 2.058%.
This shows that investors are growing risk-averse. They are all retreating from making speculative bets, reducing the speculative demand that otherwise keeps pushing the price of Dogecoin upward.
Can Dogecoin Crash Another 35%?
Dogecoin is now trying out a key support level. If it breaks below that, a precipitous decline may be around the corner.
- The 50-week EMA (Exponential Moving Average) stands at $0.2197.
- Also present here is the 0.618 Fibonacci retracement level.
- In case the support fails, Dogecoin can fall to $0.1459, a drop of 35%.
- Another drop to $0.1358 is also unavoidable in the event of increasing selling pressure.
- The Relative Strength Index (RSI) at 46.16 is still neutral. But once the RSI drops below 40, it can trigger more selling.
Can Dogecoin Make a Comeback?
Despite the recent dip, history suggests a reversal is on the cards. Dogecoin’s price action is usually influenced by Bitcoin halvings.
- DOGE reached its all-time high in 362 days following a previous Bitcoin halving event in past cycles.
- The next Bitcoin halving is just 50 days away (April 16, 2025).
If history repeats itself, Dogecoin can expect a strong rally shortly.
Dogecoin’s Fourth Falling Wedge
Technical analysis shows a falling wedge pattern developing. This is a positive sign.
- Initial wedge breakout: 88% gain
- Second wedge breakout: 208% gain
- Third wedge breakout: 445% upswing
If Dogecoin does the same, a strong recovery could be in the cards.
Will Dogecoin Rebound?
To rebound, sentiment in the market must shift. Investors need to believe that security risks are under control. The next Bitcoin halving can act as a catalyst.
Although it is a meme coin, Doge coin boasts a strong community. History might be a good indicator, and DOGE might not stay down for long. Short-term danger is still there, though.
Traders should watch support levels closely. If Dogecoin drops below important levels, further losses are in the offing. But if it stands its ground, the next big rally could be around the corner.
