Cryptocurrencies have been volatile this year. While things were looking good for crypto assets a couple of months back, they've seen massive selling pressure since May. Dogecoin (DOGE) prices have crashed along with other cryptocurrencies. Why is DOGE falling, and will it go back up?
The market opinion on cryptocurrencies is divided. On one side of the spectrum are Warren Buffett and Charlie Munger, who see them as worthless. Bank of England governor Andrew Bailey has also warned that cryptos could fall to zero. On the other hand, Elon Musk, Cathie Wood, and Mark Cuban are backing cryptocurrencies.
Why is Dogecoin falling?
There's been a massive sell-off in cryptocurrencies after China tightened regulations. On Jun. 21, the country’s central bank summoned several financial institutions for a meeting on cryptocurrencies. Maintaining financial stability has been a key objective for China, which has also cracked down on speculation in its equity and housing markets in the past.
Specifically, China is cracking down on cryptocurrency mining, as its energy-intensive nature goes against its “blue skies” policy. Almost two-thirds of Bitcoin are estimated to be mined in the country. Since 2018, China has tightened regulations in the coal, steel, and scrap industries as part of its efforts to curb pollution.
Why is China cracking down on cryptocurrency?
In addition to reducing pollution, China’s crypto crackdown has another dimension. The country is experimenting with the digital yuan and may see other cryptos as challengers.
Will DOGE go back up?
With DOGE 70 percent below its peaks and Bitcoin down 50 percent, many are wondering whether the meme cryptocurrency will recover. It's worth noting that, as a meme crypto asset, Dogecoin is more volatile than mainstream cryptos like Bitcoin.
According to chart indicators, Dogecoin is looking bearish. The coin has plummeted below its 100-day SMA (simple moving average), and its next support could be its 200-day SMA of $0.1509. Also, DOGE may be oversold after the recent crash, with a 14-day RSI (relative strength index) score of 31.6.
Will Dogecoin recover?
At lower levels, Dogecoin could see buying support from Dogecoin bulls, who are still aiming to take the joke coin to $1. Elon Musk's flip-flop on Bitcoin pressured cryptocurrencies, as well as China’s crackdown. Dogecoin has been under particular pressure as a meme coin, with some regulators apprehensive of meme cryptocurrencies, and Thailand banning them altogether.
To sum up, buying support from DOGE bulls and hodlers could help Dogecoin recover. Also, watch for a supportive tweet from Musk, the self-proclaimed “Dogefather.”