Dogecoin's price has plummeted sharply, reflecting broader selling pressure in the crypto market following a hawkish decision from the Federal Reserve.

The cryptocurrency has experienced a five-day losing streak, hitting its lowest level since November 11. From its monthly high, $DOGE has fallen nearly 45%, marking a deep dive into bear market territory.

This decline is largely attributed to growing fears within the crypto space, sparking panic among investors. The market's notorious volatility, driven by short-term retail participants, has amplified the sell-off.

Dogecoin's trajectory aligns with the Wyckoff Method, which outlines four market phases: accumulation, markup, distribution, and markdown. Over the past few months, DOGE transitioned from the accumulation phase (April-November, with minimal price movement) to the markup phase (a sharp rise driven by demand), followed by the distribution phase (where prices stabilized as major investors exited). The current markdown phase has brought significant price declines as supply outweighs demand.

Factors Driving DOGE’s Decline

Dogecoin's drop is partially influenced by skepticism surrounding Elon Musk’s proposed Department of Government Efficiency. The initiative, developed alongside Vivek Ramaswamy, aims to cut government spending by $2 trillion through measures like widespread layoffs. Critics argue such changes, while plausible in the private sector, face substantial hurdles in government due to political and regulatory challenges.

Dogecoin Price Analysis: Key Levels to Watch

DOGE recently peaked at $0.4853, a level near the extreme overshoot of the Murrey Math lines tool. It has since fallen below the strong pivot release and its 50-day moving average.

The accumulation/distribution indicator points downward, signaling continued distribution.

The next significant level is $0.2293, a prior high from March and a key horizontal line in the cup and handle pattern. A breach below $0.2293 could open the door for DOGE to fall further, potentially reaching the critical support level at $0.1953, representing a 30% decline from current prices.

Caution for Investors

Investors should beware of a potential dead cat bounce—a temporary price recovery during a broader downtrend. This phenomenon often leads to renewed selling pressure, highlighting the risks of buying the dip prematurely.

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