Unlike larger-cap cryptocurrencies such as Bitcoin and Ethereum, the Dogecoin price remains low and is still a long way from its all-time high that was reached back in 2021. Now, especially with the crypto market seeing intense selling pressure all around, the Dogecoin price is still at risk of a massive decline, and this decline could trigger the next wave of losses. A 10% loss from here will already break the support at $0.2, and a crypto analyst has predicted more downside.
Why Dogecoin Price Is At Risk Of Decline
Crypto analyst MadWhale presented an analysis of the Dogecoin price chart that shows a possible price decline from here. This is attributed to both broader development on the Dogecoin network, as well as technical analysis that continues to point toward heightened weakness on the chart.
The first of these is that Dogecoin could be seeing a cut in its issuance. The DOGE supply is unlimited, meaning that the possibilities for inflation are endless. However, if there is a cut in issuance, i.e, how much miners are paid for confirming transactions on the blockchain, then the DOGE inflation rate could be greatly reduced. This would mean less supply to the demand.
But in this case, the crypto analyst does see it as a signal that would cause investors to exist. A reason for this could be that as miner rewards reduce, then exits from the miners to other, more profitable blockchains would mean that the network security of the Dogecoin network weakens. Thus, it could mount short-term pressure on price, leading to price declines, rather than gains.
On the technical side of things, the Dogecoin price has also continued to move inside a descending channel. This has cut across several sessions, and the decline has put it on a path to testing a key support level. If the support above $0.2 fails, then a quick 15% decline could follow.
As the crypto analyst explains, there is the possibility that the crash goes deeper than expected. In any case, a 15% crash would push the Dogecoin price back below $0.19, signaling a takeover by the bears, with the next major support level sitting at $0.1845.
Other Things To Know About DOGE
One bullish development that has emerged for the Dogecoin price is the proposed Dogecoin treasury. Alex Spiro, popularly known for being Elon Musk’s personal attorney, plans to raise $200 million to buy DOGE, suggesting that a lot of demand could be headed DOGE’s way, which could drive the price higher.
However, looking at the on-chain activity for Dogecoin, the prospects are not too good. Data from Santiment shows that development on the network has screeched to a halt. Trading volume has also remained muted for the meme coin, with Coinglass showing an average of less than $3 billion daily across all credits.
