Dogecoin (DOGE), the popular meme cryptocurrency, has experienced an unexpected price drop, shaking up its market position.
At press time on January 7, 2025, Dogecoin was trading at $0.3599, after a sharp decrease of 7.79% over within minutes.
Dogecoin price by CoinMarketCap
What is behind the Dogecoin price drop?
One of the most possible reasons for the sudden Dogecoin price drop could be profit taking by investors after a significant bullish period that saw DOGE soar to $0.4.
This is confirmed by the discrepancy between the memecoin’s trading volume and the price movement.
Despite Dogecoin’s price and market cap taking a hit, its trading volume is up by 43.69% to $3.81 billion, indicating an increase in investor activity.
The volume increase suggests active trading, with investors possibly capitalizing on the lower prices or securing profits before a potential further drop
Notably, market sentiment plays a huge role in Dogecoin’s price movements, often swayed by social media trends and influential figures like Elon Musk.
While there’s no immediate indication of such an event today, investors could be moving their assets in readiness for the expected market volatility that could come with the highly anticipated swearing-in of Donald Trump’s administration which Elon Musk is a part of.
Technical analysis suggests a bearish breakout from a pennant pattern, as noted by market observers like KrissPax on X.
This pattern usually signals a continuation, but when breached downwards, it can foreshadow a price crash or correction.
Dogecoin broke out of the pennant the wrong way. Some say crash, others say buying opportunity. What do you think?
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Furthermore, the broader cryptocurrency market might be influencing Dogecoin’s price.
With Bitcoin (BTC), and other major cryptocurrencies experiencing price drops, Dogecoin (DOGE) could be caught in this downward trend.
The community’s response to this price drop is mixed. Some investors see this as a crash signal, worried about further declines.
Others view it as a buying opportunity, believing the price might rebound from this dip.
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