Bitcoin Exchange-Traded Fund (ETF)
The price of Dogecoin (DOGE) fell below the $0.08 mark in the early hours of January 10th, as market data suggests that a positive verdict on a Bitcoin Spot ETF could lead to further downside. Analysts and speculators are anticipating a decision from the US Securities and Exchange Commission (SEC) regarding the approval of the ETF. Recent trends in the market show that the correlation between DOGE and BTC has turned negative over the past month, indicating a potential decline in DOGE price if BTC reacts positively to an ETF approval.
The correlation between DOGE and BTC has reached a 5-month low. Dogecoin, which was created in 2013 as a fork of the Bitcoin blockchain, has historically been closely linked to BTC. However, in recent weeks, the prices of DOGE and BTC have been moving in opposite directions. While DOGE has dropped 26% from its recent high on December 11th to $0.078 on January 10th, BTC has increased by 5% during the same period, reaching a peak of $47,972.
The correlation coefficient is an important technical indicator that measures the correlation between the price movements of different assets. The chart below shows that the correlation between DOGE and BTC has declined to -0.52 as of January 10th, the lowest in 5 months. This means that a 10% increase in the price of BTC is likely to be followed by a 5.3% decline in DOGE price.
With the possibility of a Bitcoin ETF approval, this trend could have a significant impact on DOGE price in the coming days. Most speculators and analysts are expecting a positive verdict, which could send BTC price soaring towards $50,000. Considering the negative correlation, DOGE price could suffer a major decline if this bullish scenario for BTC materializes.
Furthermore, on-chain data shows that Dogecoin miners and node validators have been increasing their selling pressure in the past month. This further confirms the risk of a major price downturn for DOGE. The Miners’ Reserve metric, which tracks changes in the balances of coins held by miners and mining pools, shows that miners have offloaded 140 million DOGE between December 10th and January 10th. This selling spree is worth approximately $11.13 million at the current DOGE price of $0.078.
A rapid decline in miners’ reserves is seen as a bearish signal, as it introduces newly-minted coins into the market and dilutes the supply. If this increase in supply is not met with a corresponding increase in demand, it often leads to a price decline. It is not surprising that DOGE price has dropped 27% during this period of increased selling by miners.
The prolonged selling trend among miners suggests that they are pessimistic about the short-term price prospects of DOGE. This could also influence other stakeholders in the Dogecoin ecosystem to take on bearish positions.
In summary, the negative correlation with BTC and the possibility of a positive ETF verdict could lead to a significant decline in DOGE price. Additionally, the continued selling pressure from miners could further accelerate this downtrend. However, the bears would need to break the initial support level around $0.070 to validate this price correction.
On the upside, if DOGE price rebounds above $0.10, it could negate this pessimistic forecast. However, there is a major resistance level at $0.084, where a large number of addresses acquired DOGE at an average price. Failing to break through this resistance could result in another retracement of DOGE price.
Overall, the future of DOGE price depends on various factors, including the ETF verdict and the actions of miners and other stakeholders in the Dogecoin ecosystem. Investors and traders should closely monitor these developments to make informed decisions.
