Dogecoin has lost almost 70% of its value from a May record high that was the culmination of a stunning rally. The digital token will likely remain under pressure in the short term as a broader consolidation in cryptocurrencies continues following a May-June selloff, according to analysts.
Trading volumes in the meme-themed coin have almost halved since its peak, which is a bearish sign because it suggests traders are looking at other assets for investment opportunities, according to Nick Mancini, research analyst at crypto sentiment analytics platform Trade The Chain
The meme-themed coin is currently trading at around $0.24, compared with an all-time high of about $0.74 reached on 8 May. The cryptocurrency is still up by around 5,000% this year. Here is a selection of analyst views on dogecoin’s short-term prospects:
`Bearish to neutral’ – Trade The Chain
The outlook for dogecoin, looking towards the summer, is somewhat bearish to neutral – very much in line with current sentiment, Trade The Chain's Mancini said in comments emailed on July 6.
- “As we can see from the weekly sentiment chart below, outlook for DOGE has been less than stellar throughout the past week. We have seen a few bullish moments, but for the most part the sentiment around DOGE has been continually waning in the face of sell pressure on the crypto markets”
- “Looking at market data for DOGE, we can see trading volume is nearly half of what it was at its peak. For any asset to sustain a price increase, it needs volume. To see DOGE with 50 percent less volume is a clear indication that traders have looked elsewhere for trading opportunities.”
- “When asking why DOGE’s volume has been cut in half, the first thing that comes to mind is meme coin competitor SHIB. Since SHIB’s inception, it has become a darling amongst meme traders and DOGE fans alike. We can see SHIB’s volume is nearly $700 million in the past 24 hours, while DOGE’s volume is around $1.3 billion. We believe the lack of trading volume in DOGE is directly because of both the attention and trading volume SHIB has accrued since its launch.”
- “Seeing DOGE break $0.30, which is acting as major resistance, would be a great start for the bulls. The next resistance levels are $0.40, $0.46, $0.60, and $0.75. On the other hand, support is currently $0.18 with the most buy interest located around $0.09. We believe that the $1.00 price target is a little farfetched, but if meme traders turn their attention back to DOGE and can bring volume back above $2-3 billion it has a chance.”
`Short-term headwinds’ – Genesis Volatility
- “With the consolidation in major crypto currencies now occurring after the large sell-off seen in mid-May, I expect dogecoin to face headwinds in the short-term, but once a bull market resumes, we could easily see dogecoin outperform thanks to a higher beta,” Greg Magadini, co-founder and chief financial officer of Chicago-based crypto-asset option analytics firm Genesis Volatility, said in comments emailed on July 1.
- “Although dogecoin doesn't provide the most compelling tech, it does have a strong meme following and has therefore exhibited major volatility. Ten-day realized volatility currently sits at 275% while BTC is only at 101%. The main factor influencing dogecoin going forward will be a growing community and increased adoption of dogecoin”
- A $1 target for dogecoin “is very realistic given the current price of $0.25 and volatility of 275%. Given these parameters there’s about 24% chance dogecoin reaches $1 by the year's end using assumptions of normal distributions.”