Dogecoin, which surged last week, is down sharply in trading on Aug. 18. The meme cryptocurrency was trading 10 percent lower at 10:00 a.m. ET today. Why is DOGE going down and what lies ahead for the meme cryptocurrency?
Other cryptocurrencies are also taking a breather. Bitcoin, which is the largest digital asset by market cap. was down over 2 percent. Looking at the meme cryptocurrencies, Shiba Inu was down over 10 percent. Meme cryptocurrencies like Dogecoin tend to be more volatile than names like Bitcoin.
Why Dogecoin is going down
There hasn’t been any Dogecoin-specific news recently and the fall in DOGE is mainly due to the sell-off in other cryptocurrencies. As an asset class, there's a high correlation between different cryptocurrencies and they tend to rise or fall in tandem.
DOGE technical analysis and price prediction
Previously, I noted that DOGE prices could consolidate after the sharp rise and find support at the 100-day SMA. Looking at the price action on Aug. 18, Dogecoin prices are managing to hold above the 100-day SMA. If DOGE can hold on to the 100-day SMA, it would indicate technical bullishness. However, if it falls below the 100-day SMA, it would signal bearishness.
If Dogecoin falls below the 100-day SMA, it could head towards the 50-day SMA, which is currently at $0.225. Meanwhile, DOGE prices are also holding above the 10-day, 20-day, and 30-day SMA, which indicates that bears still aren't fully in charge.
The 12,26 MACD (moving average convergence divergence) also gives a buy signal and the 14-day RSI (relative strength index) has fallen to 61, which indicates neither overbought nor oversold positions. Earlier this week, Dogecoin’s RSI surged above 70, which signaled overbought positions. The RSI values have come down amid the correction in Dogecoin prices.
Watch out for the 100-day SMA, which would be a crucial trendline for Dogecoin prices as bulls and bears battle it out near the key technical zone.
Mark Cuban and Dogecoin
Earlier this week, Mark Cuban, who is among the most prominent Dogecoin backers, revealed that he only holds $500 worth of Dogecoins. That isn't even a tiny fraction of his portfolio. Recently, Cuban termed DOGE as the strongest medium of exchange among cryptocurrencies. Self-proclaimed “dogefather” Elon Musk agreed.
While Cuban and Musk have been the most prominent Dogecoin backers, they haven’t done much for the cryptocurrency apart from tweets. We don’t know exactly how many Dogecoins Musk holds but it won’t be surprising if it’s a small fraction of his holdings.
Elon Musk's DOGE holdings
Musk is a cash-poor billionaire and has to offload Tesla shares to arrange cash regularly. What we know for sure is that Musk hasn’t yet allowed Tesla to accept Dogecoin. To be fair, he did allow DOGE as a payment method for his privately held SpaceX, but that company isn't generating a lot of revenues, unlike Tesla.
How will Dogecoin reach $1?
Billionaire backers of cryptocurrencies would have to show real support and intent to show that they back them. Mere lip service and tweets might not take dogecoin to $1 as many dogecoin fans have long been hoping for. For DOGE to reach $1, we’ll need a recovery in the cryptocurrency market and also strong support from backers like Musk.