Dogecoin DOGE/USD was plummeting about 15% lower at one point during Monday’s 24-hour trading session, in sympathy with the Bitcoin BTC/USD and the S&P 500, which plunged about 14% and 3%, respectively.
The general markets have taken a beating recently and the Federal Reserve’s inability to tackle soaring inflation so far has spooked investors of stocks and, seemingly, cryptos alike.
Fear in the crypto sector also accelerated on Monday, when traders and investors woke up to find out that crypto trading platform Celsius had halted withdrawals, swaps and transfers “due to extreme market conditions.” The news caused massive fear to hit the space, with traders and investors cashing out their positions on other platforms to avoid losing access to their crypto investments.
The heavy declines across the crypto sector since November 2021 negates any argument that cryptocurrencies could replace gold as a safe-haven asset, or that coins and tokens could be used as a hedge for inflation. Dogecoin co-creator Billy Markus took to Twitter on Saturday to drive home that point, calling the idea that crypto could be a hedge for inflation “marketing bull***.”
Dogecoin bull and Tesla, Inc TSLA CEO Elon Musk has been notably quiet about the meme-crypto’s price action recently, seemingly ignoring Dogecoin’s sharp decline.
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The Dogecoin Chart: The bears are firmly in control of Dogecoin’s price, which Benzinga pointed out on Saturday. The crypto is trading in a sharp downtrend, with the most recent lower high printed on June 9 at $0.081 and the most recent confirmed lower low was formed at the $0.077 mark the day prior. On Sunday, Dogecoin closed the 24-hour trading session at its low-of-day, which indicated the crypto would trade lower again on Monday but a bounce up to at least print a lower high is likely to come over the next few days.
- Dogecoin’s relative strength index (RSI) plummeted to the 21% level on Monday, which puts the crypto into oversold territory and indicates a bounce is likely. When Dogecoin’s RSI fell below the 30% level on May 12, the crypto bounced up 50% on that day and the 24-hour session that followed.
- If Dogecoin closes the trading session with a lower wick, it could indicate a bounce to the upside is imminent.
- The crypto’s decline on Monday was taking place on much higher-than-average volume, which indicates extreme fear has gripped the crypto. At press time, Dogecoin’s volume was measuring in at about 790 million on Coinbase, compared to the 10-day average of 364 million.
- Extreme levels of volume are often preceded by declining volume and consolidation, which is likely to eventually take place as the crypto runs out of sellers over the next few days. Once consolidation takes place, traders can watch for chart patterns to develop to signal the possible future price action, with continuation to the downside the most likely scenario.
- Dogecoin has resistance above at $0.065 and $0.083 and support below at the psychologically important 5-cent mark and lower at 4 cents.