Dogecoin crashed on Jul. 8 amid a sell-off in crypto assets, but was trading higher on July 9. Is DOGE's crash over? What’s the prediction for the meme cryptocurrency in 2021?
Dogecoin is now down 72 percent from its peak. That said, such volatility is not unusual for cryptocurrencies, an emerging asset class. Whereas some investors see blockchain as the future of finance, some are reluctant to invest in cryptocurrencies.
Why is Dogecoin crashing now?
Dogecoin isn't the only asset crashing—all meme assets, including AMC Entertainment and GameStop stocks, have plummeted. Adding to that is regulatory pressure, especially in China. Fan Yifei, deputy governor of the country's central bank, has said that stablecoins may be a risk to the global financial system.
China has been at the forefront of the crackdown on cryptocurrencies, restricting crypto miners and barring the country’s financial institutions from dealing in cryptocurrencies.
Digital currencies could challenge cryptocurrencies
China isn't the only country cracking down on cryptocurrencies—India is also weighing its options in banning cryptocurrencies, and several European countries are contemplating a new regulator to oversee cryptocurrencies. However, the European Union is also reviewing the possibility of a digital euro, and China is experimenting with a digital yuan.
Another factor dragging down crypto assets is the fact that last year's rise was speculative, and now prices are correcting. Despite its recent plunge, DOGE is still up for the last year, as are many other cryptocurrencies.
Also, like other meme coins, DOGE doesn’t have any real-world usage. Whereas the joke coin's bulls were trying to cajole Amazon into accepting DOGE, the joke seems to be on them.
Dogecoin versus Tiger King
Matt Wallace, who was among Dogecoin's prominent supporters, has now backed Tiger King Coin (TKNG). He tweeted on Jul. 4 that he was loading up on TKNG. Given that celebrity endorsements have been a key price driver for cryptocurrencies, a famous DOGE backer shifting loyalty isn't positive news.
Even Elon Musk has been tweeting about other cryptocurrencies, which has left many questioning his support for DOGE. It’s been a long time since the “dogefather” held a Twitter poll on whether Tesla should accept Dogecoin, and there's been no additional news on that matter.
DOGE's price prediction for 2021: Technical analysis
Whereas Dogecoin is close to oversold with a 14-day relative strength index score of 34.9, it still looks bearish, having plunged below its 10-, 30-, 50-, and 100-day SMAs (simple moving averages). It's currently hovering near its 200-day exponential moving average. If it falls below that level, it could find support at its 200-day SMA of $0.1711 or continue its decline.
It looks like Dogecoin needs a new narrative or celebrity endorsement to find its feet. Considering the growing competition from new crypto assets, DOGE bulls might be in for a struggle.