Dogecoin faces short-term `headwinds’ amid crypto consolidation
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.
What is your sentiment on DOGE/USD?
- “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”
Dogecoin sentiment chart, from Trade The Chain- “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.”
Trade DogeCoin to US Dollar - DOGE/USD CFD
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