Dogecoin (DOGE), the most famous meme cryptocurrency, has suffered a sharp decline over the past two days. The token has fallen 35% from its annual high, with its price now hovering at $0.3150. This drop coincides with a broader retreat in cryptocurrency markets and waning optimism about a Dogecoin ETF approval.
Profit-Taking and Market Correlation Fuel DOGE Drop
The cryptocurrency market, which saw a significant pre-Christmas rally, is now undergoing a sharp correction. Bitcoin, for instance, has dropped from its recent peak of $100,000 on December 24 to $95,000. Other major cryptocurrencies like Ethereum and Shiba Inu have also posted losses, reflecting widespread profit-taking by investors.
Dogecoin, which shares a high correlation with these assets, has not been spared. Its decline aligns with broader market trends, as traders seek to lock in profits after the recent bullish surge.
A key factor amplifying the selloff is the general fragility of sentiment in the crypto sector, which tends to fluctuate rapidly based on macroeconomic cues and investor mood.
Dogecoin ETF Approval Odds Plunge
One of the more intriguing stories tied to Dogecoin’s performance involves the odds of a DOGE-based ETF approval by the U.S. Securities and Exchange Commission (SEC). On Polymarket, an online prediction platform, these odds have nosedived to just 20%, down from a high of 32% in November.
This sharp drop in confidence underscores skepticism about regulatory approval under the current SEC leadership. While crypto enthusiasts had hoped that Paul Atkins’ potential influence might accelerate approvals for spot ETFs, the SEC’s history of stringent oversight tempers those expectations.
Interestingly, a Dogecoin ETF would theoretically have fewer hurdles compared to other cryptocurrencies. Unlike assets like Solana and Ripple, which the SEC classifies as financial securities, Dogecoin operates as a proof-of-work (PoW) cryptocurrency similar to Bitcoin. This distinction might simplify its regulatory path, but it hasn’t been enough to reassure investors in the current climate.
Political Connections Add Complexity
Dogecoin’s narrative is further complicated by its association with Elon Musk, Tesla’s CEO and a vocal proponent of the token. Musk, who once dubbed himself the “Dogefather,” has consistently supported the cryptocurrency, boosting its profile. His growing political ties, particularly with former President Donald Trump, have added an unexpected dimension to Dogecoin’s cultural and economic significance.
Musk is set to lead the Department of Government Efficiency (DOGE), a newly proposed government body focused on reducing costs. This somewhat ironic connection could potentially keep Dogecoin in the spotlight but might also subject it to political controversies that influence market perceptions.
Bearish Signals Dominate Dogecoin Charts
Technical indicators paint a grim picture for Dogecoin in the near term. After peaking at $0.4840 earlier this month, the token has slid below its 50-day moving average and is flirting with the lower boundary of the Ichimoku cloud indicator.
A look at the Fibonacci retracement levels reveals another concerning trend: DOGE has fallen below the 38.2% retracement mark. Adding to the bearish outlook, a flag pattern—a widely recognized bearish indicator—has emerged on the charts.
If this pattern holds, Dogecoin’s next key support level sits at $0.2625, representing a potential 16% decline from its current price. However, any sustained move above $0.35 could invalidate this bearish setup and pave the way for a recovery.
- Immediate Resistance: $0.35
- Immediate Support: $0.2625
These levels could guide traders looking for entry or exit points as volatility continues to grip the cryptocurrency market.
