NOIDA (CoinChapter.com)— Dogecoin (DOGE) price action recently has been nothing to write home about, with the token failing to move above $0.115 for the entirety of Aug. 2024. The memecoin, tied closely to billionaire Elon Musk, has struggled to regain its former momentum.
Historical patterns suggest continued downward pressure as Sept.2024 approaches, particularly amid broader market uncertainty. Trading around $0.101, DOGE price has already seen a nearly 17% drop from its recent high of $0.113.
Coincodex predicts a bearish month ahead for Dogecoin.
Coincodex predicts a bearish future for the DOGE USD pair, suggesting the token would likely trade around near $0.086 in the coming month.
Historical Weakness and Technical Indicators for Dogecoin
September has traditionally been a challenging month for Dogecoin, as historical data indicates a consistent pattern of price declines.
DOGE price action has historically been meh during September. Source: Tradingview
The monthly candlestick chart shows little to no life in DOGE price action during September, signaling that sellers have dominated this month in previous years. This year may not be different, with Dogecoin already showing signs of weakness as it enters September.
Dogecoin futures open interest. Source: Coinglass
The open interest and funding rate also support a bearish outlook. For example, the nearly stagnant open interest suggests that traders have lost confidence in maintaining long positions. At the same time, volatile funding rates indicate a higher demand for short positions.
The combination of technical indicators indicates continued selling pressure in the near term.
Dogecoin supply distribution by balance of addresses. Source: Santiment
Moreover, large holders, or whales, have reduced their positions, reinforcing the bearish sentiment. The decline in whale activity typically accompanies price drops, as these large market participants often can move markets.
The lack of significant accumulation by smaller holders also suggests that the broader market sentiment remains cautious, with few signs of a potential reversal.
Given the historical tendency for Dogecoin price to underperform in Sept., this neutrality might lean towards further declines unless a significant bullish catalyst emerges.
Bearish Setup Could Be Doom For DOGE
Meanwhile, a bearish setup, called the ‘descending triangle pattern,‘ could add to the bearish cues against the DOGE USD pair.
DOGEUSD pair formed a bearish setup with a 63% downside target.
Analysts recognize the descending triangle as a bearish continuation pattern. The configuration features a declining upper trendline that compresses price action into lower highs, while a flat lower trendline serves as consistent but weakening support.
The pattern signals intensifying selling pressure, resulting in progressively weaker rallies that struggle to breach resistance.
In this setup, traders estimate the potential downside by measuring the maximum height of the triangle. Pepe coin’s price recently broke out of this descending triangle, only for bulls to push it back within the pattern.
However, if the DOGE USD pair confirms the bearish setup, DOGE price could plummet by nearly 63%, reaching a target near $0.038.
A breakout below the pattern in the current market climate could hurt DOGE prices, potentially resulting in losses for the trading pair.
Elon Musk’s Influence on Dogecoin and Potential Market Catalysts
While the bearish cues are strong, a few potential bullish factors could disrupt the negative trend. Elon Musk, who recently won a high-profile lawsuit related to Dogecoin, remains a wild card.
Although Dogecoin’s price is not as sensitive to Musk’s tweets as it once was, any celebratory tweets or announcements from him could still provide a short-term boost to the token’s price.
Federal Reserve is likely to cut interest rates in Sept. 2024. Source: CME
Another potential bullish catalyst is the Federal Reserve’s anticipated rate cut in Sept. 2024. A rate cut could inject liquidity into the market, potentially sparking a broader rally in risk assets, including cryptocurrencies.
If Bitcoin reacts positively to the rate cut, it could lift other tokens like Dogecoin despite the prevailing bearish sentiment.
Additionally, while the Fed’s actions are closely watched, global central banks’ easing monetary policies could influence market dynamics. Some central banks have started to signal a softer stance on monetary tightening, which could positively impact global liquidity and, by extension, the cryptocurrency market.
However, this impact is likely to be more indirect and less pronounced compared to the immediate effects of a Fed rate cut.
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