For those who still require an introduction to Dogecoin (DOGE), we should start by saying that this isn’t just a random cryptocurrency. It’s the creator of meme coins, a distinct class of digital tokens that has developed into a dominant force in the cryptocurrency space, propelled by humor, internet culture, and community support.
The popularity of meme coins has grown so much over the years that they’ve come to command a 3% share of the entire crypto market. This is quite a remarkable achievement for a crypto category that comes from such humble and unserious origins. And Dogecoin has been in the lead since the very beginning. As a result, the number of individuals interested in learning how to buy Dogecoin and add it to their portfolios has increased considerably as time went by.
However, the assets’ recent performance suggests that there might be trouble on the horizon. This is an important matter to dissect since analyzing a token’s potential and prospects for the future can help one make better informed decisions regarding their investments.
Where the problems lie
Let’s start with the bad news first and see why some analysts believe that DOGE might have lost its shine and could be headed for a crash. First of all, the figures don’t look so good right now for the meme coin initiator, and they haven’t for a while. Although the token has registered slight gains from time to time this year, the moments of growth have been short and sparse, while the price dips have been sharper and more frequent, leading to a steady downward trend.
Over the past three months, Dogecoin has lost 44% of its value, and its market cap has fallen to $26.93B. The month of February saw a steep slump in the number of whale transactions over $1 million on Dogecoin’s blockchain. Moreover, CoinGlass data reveals a significant drop in Dogecoin’s open interest (OI), which has gone from $5.42 billion to $2.21 billion. All these metrics indicate a bearish outlook for Dogecoin.
Many attribute Dogecoin’s ongoing decline to the fact that it hasn’t been part of any trending narratives lately. Everyone knows that meme coins rely more on hype and external support than on intrinsic value to fuel their growth. The endorsements that Dogecoin received in the past from the likes of Elon Musk have been instrumental to its ascent.
However, Musk seems to have forgotten about the meme coin, having been busy with other things like politics. And even if he were to resume his habit of writing cryptic crypto posts that hint at Dogecoin’s potential, Tesla’s co-founder and CEO doesn’t have the same influence as he had a few years back.
Another potential reason why Dogecoin’s appeal among investors has somewhat dimmed is the lack of innovation. While other meme coins are either looking to develop and integrate new features to make up for the lack of functionality or already have them by design, Dogecoin has been lagging behind in this respect.
This also highlights a pretty obvious truth: the original meme coin is facing more intense competition than ever before. Since its launch in 2013, numerous Dogecoin copycats have emerged. Many of them have managed to gain a fair share of popularity and draw in investors interested in meme coins, thus some of the funds that would have gone into DOGE are now going elsewhere.
The light at the end of the tunnel
While Dogecoin may not be going through its best moment, this is not necessarily a reason to sound the alarm and panic, at least according to certain experts. Some reports suggest that despite the current situation, not all is lost and there might be better times ahead for Dogecoin.
The main reason for optimism comes from Dogecoin’s price history and its correlation to Bitcoin halvings. In the past, DOGE has climbed to record highs approximately one year after Bitcoin’s quadrennial reduction. If this scenario were to recur in the current cycle, Dogecoin should start appreciating shortly.
If we take a look at the token’s chart patterns, we can see that not so long ago, Dogecoin started forming a falling wedge. Previously, these types of arrangements have led to notable price surges. The first time Dogecoin displayed a falling wedge, it went on to jump by 88%. The second time, it experienced a surge of over 200%. The third falling wedge instance caused Dogecoin to increase by 445%. Therefore, chances are quite high that Dogecoin will go on a major rally after its most recent falling wedge.
The fact that DOGE recorded a noteworthy increase of 5.89% on May 1st also strengthens the belief that the leading meme coin might soon end its declining trajectory and enter a new bull phase. Although the upward trend was noticed across the board, Dogecoin was the biggest winner of the ten biggest cryptocurrencies by market cap, outperforming coins like Bitcoin, Ethereum, and XRP.
Another factor supporting the optimistic narrative is the hype created around the potential approval of the 21Shares Dogecoin ETF. Rumors related to the launch of a DOGE-based ETF have already brought the token back in the spotlight and contributed to recent gains. So, one can only imagine the price boost that Dogecoin might get if the reports come true and 21Shares receives the green light for the proposed product. This is bound to spark more interest among traders and investors and drive up the token’s value.
Final thoughts
Whether Dogecoin is in for a rebound or will continue to underperform remains to be seen. However, even if none of the positive scenarios materialize, it’s still highly unlikely that Dogecoin could vanish into thin air or crash so dramatically that it wouldn’t be able to recover. So, it’s pretty safe to say that DOGE will maintain its position as an important market player for the foreseeable future.
