Dogecoin price is in a bear market: How low can DOGE go?

After the Federal Reserve made a tough policy decision, the wave of sell-offs in the cryptocurrency industry intensified, and the price of Dogecoin plummeted.

Dogecoin (DOGE) has fallen for five consecutive days, reaching its lowest level since November 11, nearly 45% down from its monthly high, entering a deep bear market.

The collapse of Dogecoin is related to the increasing panic in the cryptocurrency industry, leading to panic selling by investors. Cryptocurrencies remain highly volatile as most participants are retail investors with shorter investment horizons.

The decline of DOGE indicates that the token has entered the markdown phase of the Wyckoff method after several weeks of distribution. Wyckoff's framework identifies four phases that an asset experiences: accumulation, markup, distribution, and markdown.

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For Dogecoin, the accumulation phase occurred between April and November, with limited price fluctuations. It then entered the markup phase, where demand exceeded supply, leading to a parabolic rise. In the distribution phase, as savvy investors exited, prices stabilized. Now, with prices falling and supply exceeding demand, panic selling ensues.

The decline of Dogecoin is also influenced by doubts about Elon Musk's government efficiency plan. Musk and Vivek Ramaswamy plan to cut government spending by more than $2 trillion through measures like massive layoffs. However, analysts believe that while this change is feasible in the private sector, it faces significant regulatory and political resistance in government.

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