The Dogecoin price declined for the third straight day as the sell-off in cryptocurrencies accelerated. DOGE declined by more than 1.2% and is currently trading at $0.2500, which is about 22% below the highest point this week.
It is a sea of red in the cryptocurrencies industry. Bitcoin, the biggest cryptocurrency in the world, declined to about $46,000, which was substantially below this week’s high of more than $52,000. Similarly, Ethereum has crashed from more than $4,000 to the current $3,445 while Cardano has fallen by more than 7% to $2.45.
Cryptocurrency watchers are still attempting to decipher the reasons for the ongoing sell-off. First, some believe that the sell-off is mostly because of profit-taking considering that cryptocurrencies have more than doubled in the past few weeks. Indeed, before the current sell-off, Dogecoin was up by more than 117% from its lowest level in July.
Second, analysts believe that the popular concept of selling the news is affecting cryptocurrencies. The big topic this week has been news that El Salvador’s government bought Bitcoin worth more than $20 million. Therefore, selling the news is happening since most traders were waiting for the next moves by the government.
Third, the Dogecoin price is also falling after the Securities and Exchange Commission (SEC) threatened to sue Coinbase of it launches a digital lending product. The SEC also subpoenaed the company in relation to this product, which it considers to be a security.
Finally, the resurgent US dollar has also pushed the Dogecoin price substantially lower. The US dollar index rose by more than 0.20% on Wednesday, a day after it surged by more than 0.40%. This growth has also pushed other assets like stocks and commodities lower.
The daily chart shows that the Dogecoin price was at risk of s major meltdown even before this sell-off. The coin formed a double-top pattern whose neckline was at $0.2635. It dropped below this neckline on Tuesday and fell to the lowest level since August 7.
Along the way, Dogecoin managed to move below the 25-day and 50-day exponential moving averages (EMA).
Therefore, I suspect that the coin will maintain the bearish trend as investors target the next key support at $0.200. A move above $0.30 will invalidate the bullish view.