Dogecoin Price Is In A Bear Market: How Low Can DOGE Fall?

Dogecoin price has nosedived as a wave of selling intensified in the crypto industry following the highly hawkish Fed decision.

Dogecoin (DOGE) has dropped for five consecutive days, reaching its lowest level since Nov. 11. It has plummeted by almost 45% from its monthly high, entering a deep bear market.

Dogecoin’s crash is linked to rising fear in the crypto industry, leading to panic selling among investors. Crypto remains highly volatile, as most participants are retail investors with short investment horizons.

DOGE’s decline suggests the coin has entered the markdown phase of the Wyckoff Method, following weeks in the distribution phase. Wyckoff’s framework identifies four phases assets undergo: accumulation, markup, distribution, and markdown.

In Dogecoin’s case, the accumulation phase occurred between April and November, marked by limited price movement. The markup phase followed, driven by higher demand than supply, causing a parabolic rise. The distribution phase saw prices stabilize as smart investors exited. Now, in markdown, supply exceeds demand, leading to panic selling.

Dogecoin’s drop is also influenced by skepticism about Elon Musk’s Department of Government Efficiency initiative. Musk and Vivek Ramaswamy aim to slash government spending by over $2 trillion through measures like mass layoffs. However, analysts argue such changes are feasible in the private sector but face significant regulatory and political resistance in government.

DOGE price peaked at $0.4853, a key level near the extreme overshoot of the Murrey Math lines tool. It has since dropped below the strong pivot release and the 50-day moving average.

The accumulation/distribution indicator points downward, signaling ongoing distribution.

The next critical level to monitor is $0.2293, which was the highest swing in March. This level also aligns with the horizontal line of the cup and handle pattern.

A drop below $0.2293 could increase the likelihood of DOGE falling to the major support/resistance pivot at $0.1953, approximately 30% below the current price.

Investors should be cautious of a dead cat bounce when considering buying the dip. A DCB occurs when an asset in a downtrend briefly rises before resuming its downward trajectory.