Bitcoin’s Leader Takes Charge
The price of Dogecoin (DOGE) experienced a dip below the $0.08 mark in the early hours of January 10th. Market data trends suggest that a positive verdict on a Bitcoin Spot ETF from the US Securities and Exchange Commission (SEC) could trigger further downside for DOGE.
Market analysts and speculators are currently anticipating an imminent decision on the ETF approval from the SEC. Recent data trends indicate that the correlation between DOGE and Bitcoin (BTC) prices has turned negative over the past month. This suggests that if BTC reacts positively to an ETF approval, there could be a potential downward swing in the price of DOGE.
The correlation between DOGE and BTC prices has reached a 5-month low. Dogecoin, which was created in 2013 as a light fork of the Bitcoin blockchain, has had closely intertwined fortunes with BTC over the years. However, in recent weeks, the prices of DOGE and BTC have been moving in opposite directions. While DOGE has experienced a 26% decrease from its local top record on December 11th, BTC has seen a 5% increase during the same period.
The correlation coefficient, which measures the correlation between the price movements of different assets, has declined to -0.52 as of January 10th, its lowest level in 5 months. This negative correlation indicates that a 10% increase in the price of BTC could be followed by a 5.3% decline in the price of DOGE.
With the possibility of a positive BTC ETF approval verdict on the horizon, this trend could have significant implications in the coming days. Speculators and market analysts are leaning towards a positive verdict, which could potentially push the price of BTC towards a parabolic rally up to $50,000. Given the negative price correlation, this could result in a significant downturn for DOGE.
On-chain data also reveals that Dogecoin miners and node validators have been intensifying their selling pressure in the past month. This further confirms the risk of a major downward trend for DOGE. The decline in miners’ reserves is seen as a bearish signal, as it introduces newly-minted DOGE coins into the market, diluting the supply. When this increase in supply is not met with a corresponding increase in demand, the price tends to decline. As a result of the miners’ selling spree, the price of DOGE has dropped by 27% in the past month.
The prolonged selling trend among miners suggests their pessimism about the short-term price prospects of DOGE. This sentiment could influence other strategic stakeholders within the Dogecoin ecosystem to take on bearish positions as well.
In summary, the negative correlation with BTC and the possibility of a BTC ETF approval verdict could lead to a significant drop in the price of DOGE. Additionally, the continued selling pressure from miners could further accelerate this downward trend.
Based on the analyzed market data trends, there is a risk of a major price correction for DOGE. However, the initial support level around $0.070 could pose a challenge for the bears. On the upside, if the price of DOGE rebounds above $0.10, it could negate the pessimistic forecast. However, there is a significant resistance level at $0.084 that could prevent a breakout.
Overall, the future of DOGE price hinges on the outcome of the BTC ETF approval verdict and the selling pressure from miners.
