A final headwind challenging Dogecoin price is the tight correlation with Bitcoin BTC as the Correlation Coefficient is running at .80 with the pioneer cryptocurrency. The close correlation indicates that DOGE price is now greatly influenced by Bitcoin price action, which has been directionless since May 19.
With a neutral to negative price structure for Bitcoin BTC and the tight correlation, it is challenging to contend that the Dogecoin price will decouple in the short term, presenting the potential for further DOGE weakness.
Of course, it has been frequently shown on different timeframes that social media can profoundly impact Dogecoin price, and it cannot be ruled out. Nevertheless, with all things being equal, the lackluster Bitcoin BTC price action will be a headwind.
Few cryptocurrencies have been as entertaining and profitable as Dogecoin in 2021. Still, like all digital assets, it is also governed by technical realities and influenced to some extent by the price authority of Bitcoin. As a result, Dogecoin's aspirations of turning the June 22-25 price rebound into a sustainable rally narrative are being questioned by the three realities illuminated above.
The potential outcome of the situation is a decline to the June 22 low of $0.152, representing a 35% price decline from the current price. The drop would best the support offered by the May 19 low of $0.195 and the 200-day SMA at a price of $0.168, and reset the outlook for Dogecoin price for the foreseeable future.
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