Bitcoin [BTC] and Dogecoin [DOGE] have always been closely linked, and usually, Bitcoin's movements drive the price changes of Dogecoin.
However, although Bitcoin recently broke the $100,000 mark, Dogecoin failed to keep up and instead fell below the key support level of $0.40.
This has made the gap between the two increasingly apparent, and people are starting to pay attention to the future relationship between them, as well as whether Dogecoin can reverse its downward trend. While Bitcoin has been soaring, Dogecoin seems to be lagging behind.
Despite Bitcoin rising by 7.5% and breaking the $100,000 mark, Dogecoin's performance has been markedly different.
Dogecoin reached its highest point of $0.45 on December 8, 2024 (the highest level since 2021), but it failed to maintain this upward momentum and instead faced strong resistance at this price level. This resistance level is clearly critical and has become the third significant pressure point in the current market cycle.
As of now, Dogecoin's trading price is $0.3980, and the trading volume indicates that its upward momentum is slowing, with buying pressure weakened compared to early December. Meanwhile, the RSI has retreated to the neutral range of 51.16, showing that bullish momentum is waning.
The movements of Dogecoin and Bitcoin lack synchronization, and there are growing concerns in the market about the reasons behind this divergence. OBV (On-Balance Volume) has stagnated around 161 billion, suggesting that capital inflow into the market has stalled, leading to a lack of confidence in whether Dogecoin can recover its upward trend.
So, is it possible for Dogecoin to reach a new high during this cycle?
Dogecoin's historical high of $0.73 was achieved during the 2021 cryptocurrency bull market, and it currently seems like a distant goal. Although the possibility of breaking this price still exists, whether Dogecoin can rise against the trend while Bitcoin continues to climb remains challenging.
Most people believe that a revival of Dogecoin is still possible, but it requires some catalyst. Historically, the sharp fluctuations in Dogecoin have often been driven by sudden interest from retail investors, which often stems from trends on social media or certain rumors, such as potential uses of payment applications on platforms like X.
To surpass the historical high of 2021, Dogecoin needs a wave of similar retail enthusiasm, along with strong trading volume support, and participation from both retail and institutional investors is also essential.
A more realistic scenario is that the possibility of Dogecoin breaking its historical high may have to wait until early 2025, when changes in the macroeconomic environment may provide new opportunities for Dogecoin.
These changes may include political factors, such as Donald Trump's potential return to office, which could bring new optimism to the cryptocurrency market and thereby push Dogecoin's price up.
Possible catalysts for Dogecoin's price decline
Several key factors could lead to a further decline in Dogecoin's price. A major risk is the decoupling of Dogecoin from Bitcoin. Bitcoin has broken the $100,000 mark, while Dogecoin has not shown a similar increase, raising concerns that investor sentiment may shift.
Additionally, the Federal Reserve's interest rate decision in late November and ongoing inflationary pressures have also put pressure on the performance of risk assets like cryptocurrencies. A tightening of monetary policy or inflation issues could dampen the appeal of speculative assets, thus affecting the performance of Dogecoin and other altcoins.
Moreover, the sentiment in the meme coin market is itself very unstable. If retail interest wanes (which is often triggered by social media trends or regulatory changes), the price of Dogecoin may fall rapidly.
The uncertainty of global cryptocurrency regulation has intensified, especially as many countries are considering implementing stricter regulations on cryptocurrencies, which could negatively impact Dogecoin and lead to further shrinkage of its market capitalization.