In the past 12 days, Dogecoin (DOGE) has experienced a sharp decline, losing more than 40% of its value. After trading above $0.48 on December 8, this meme-inspired cryptocurrency dropped to $0.2638 on December 20, sparking speculation about its near-term future direction. The context of this price drop is the cryptocurrency market's reaction to signals from the U.S. Federal Reserve's policy, with the latest downturn largely driven by hawkish forecasts from the Federal Open Market Committee (FOMC).

While the Fed's December meeting delivered the widely anticipated 25 basis point rate cut, the real shock came from the revised dot plot, indicating fewer future rate cuts than previously expected. The market had hoped for three rate cuts in 2025, but the FOMC's guidance now leans towards only two, suggesting a more cautious approach amid persistent inflationary pressures. This change in outlook has triggered widespread sell-offs of risk assets, including cryptocurrencies. Bitcoin (BTC) fell below $93,000 and altcoins dropped -20%. In the past 24 hours, a massive $1.17 billion in long positions were liquidated across cryptocurrency markets.

How low can Dogecoin's price go?

Some prominent analysts have contemplated DOGE's pullback, framing it within the context of historical patterns and macro-level dynamics. Technical analyst Kevin (@Kev_Capital_TA) emphasizes the importance of previous cycles. He notes that historically, Dogecoin has undergone several significant corrections on its way to its cycle peak, stating that the current pullback—similar to previous 50% pullbacks—could be part of a normal bull market structure rather than a sign of systemic weakness.

According to Kevin, "In the previous cycle, Dogecoin had three separate 50% corrections on its way to its cycle peak. If we tap into macro-structural support and macro golden pockets just below, it would be a correction of about 45% from the peak, based on historical analyses, which would be just enough for us to continue the upward trend. If we lose $0.26 on a weekly close, then I would start to seriously worry about this market structure, but until then, this should be considered a normal pullback of a bull market."

Kevin also emphasizes Bitcoin's influence on the altcoin landscape. Instead of focusing solely on DOGE's independent chart, he encourages traders to "not focus too much on the altcoin chart" to assess the macro direction of the market. BTC remains the key asset whose price action often dictates sentiment across the entire cryptocurrency space.

Kevin illustrates this point by sharing a liquidation heatmap of BTC/USDT, showing that the market may seek to clear out lower liquidity pockets before any meaningful recovery. "Let's go collect all the liquidity at $95,000-$90,000 and then we can start talking about recovery. Until then, there’s no reason to overanalyze. From a fundamental perspective, the market is overreacting to what Powell said and not really listening to him. Just because of the rate cut forecasts," he wrote.

Balo (@btcbalo), another cryptocurrency analyst, reinforces the importance of the $0.26 level. He points out that Dogecoin "still has a few days to salvage the week," suggesting that a weekly close above this threshold will maintain a healthy market structure.

Successfully defending the $0.26 zone could pave the way for a new upward trend, potentially targeting a return to $0.42—the level that Balo considers a crucial pivot point. Regaining $0.42, according to him, would allow DOGE to 'teleport' to the $4 mark, a scenario he associates with a full recovery of the rally.

A third analyst, CEO (@Investments_CEO), provides a historical perspective, suggesting that DOGE's current pattern aligns with its multi-year cyclical nature. "DOGE seems to be fitting into its normal 3-4 year cycle. Let's zoom in," he said.

The analyst refers to DOGE's price action following a previous fractal cycle. Back in 2021, Dogecoin experienced its first significant price surge as it approached its all-time high (ATH). After a 50% correction, DOGE continued its upward momentum, breaking the ATH and then entering a price discovery phase. As mentioned earlier, this scenario could align with a price target of $0.26.

At the time of the press release, DOGE was trading at $0.26919.

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