The price of Dogecoin (DOGE) is down today, mirroring trends elsewhere in the cryptocurrency market.
Why is Dogecoin price down today?
On Nov. 28, DOGE's price dropped over 3.5% to $0.076, underperforming the crypto market, which fell by around 1.25% in the same period. The memecoin's price decline is part of a broader correction that has witnessed nearly a 12.5% retreat in over a week.
Let's take a closer look at the most likely reasons behind Dogecoin's latest pullback.
Dogecoin's drop today precedes a period of growing bearish divergence between its price and a key momentum indicator.
Notably, between Oct. 6 and Nov. 17, DOGE's price rallied, forming higher highs. But, in the same period, its daily relative strength index (RSI) dropped, forming lower highs.
As a rule of technical analysis, a divergence between rising prices and falling RSI indicates weakness in the prevailing uptrend, prompting traders to secure profits at local price highs.
Rising Bitcoin dominance
Dogecoin's price drop today is part of the decline in the broader altcoin market weight versus Bitcoin (BTC).
Notably, the Bitcoin Dominance Index, which measures the top cryptocurrency's market share versus the combined weight of all altcoins, has risen 0.83% in the past 24 hours. In simple words, traders have rotated their capital from altcoins to Bitcoin.
In contrast, Dogecoin's market dominance versus the rest of the crypto market declined by over 1% on Nov. 28.
Dogecoin's price decline today appears to be a result of a bearish rejection by one of its strongest distribution areas.
Notably, DOGE's price reversed after retesting its 0.236 Fib line near $0.081 as resistance. Since May 2023, its attempt to close above this price level has failed, as illustrated below.
As a result, DOGE's likelihood of continuing its pullback move is high in December 2023, with its 50-day exponential moving average (50-day EMA; the red wave) near $0.072 acting as the primary downside target.
DOGE whales sell
Dogecoin's price decline coincides with a reduction in the DOGE supply held by its richest investors.
Notably, the supply controlled by Dogecoin addresses with a balance between 100 million and 1 billion DOGE tokens (the green wave) has dropped nearly 1% in the past two weeks. Interestingly, the supply held by the next cohort — those holding over 1 billion DOGE (the black wave) — has jumped 0.5% in the same period.
The 1 billion-plus DOGE balance cohort may include addresses associated with crypto exchanges and over-the-counter trading desks, indicating whales have transferred their Dogecoin to such platforms for the purpose of selling.
Is Dogecoin bull market over?
From a technical perspective, DOGE needs to break above the upper trendline of its prevailing descending triangle setup. If this bullish scenario plays out, the price may reach $0.10, its September 2022 resistance, by the end of 2023.
The bears, however, will try to pull down DOGE/USD by 25% to $0.056 by the year's end, and perhaps even by 70% to $0.023 in Q1, 2024 if the price breaks below the triangle's lower trendline.
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A descending triangle forming in a downtrend is considered a bearish continuation setup. The pattern resolves when the price breaks below its lower trendline and falls by as much as the maximum distance between its upper and lower trendline.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.