The price of Dogecoin decreased by almost 5% in the last day after the general market crash. The meme coin that saw the improved sentiment did a quick 180 and started bleeding. However, while the price of Dogecoin may simply be following Bitcoin’s descent, are there other factors driving the decline?
Why is the price of Dogecoin falling?
One reason Dogecoin’s price is down today is because of its proximity to the Shiba Inu. The latter saw a much-anticipated launch of Shibarium go awry on Wednesday, causing a sharp drop in meme coins in its ecosystem.
As a result of this unfortunate event, the price of SHIB fell almost 10% in a few hours and it seems to have spilled over to Dogecoin. Dogecoin, which is a meme coin and the biggest competitor for Shiba Inu, is expected to rally if SHIB goes up as a result of the launch of Shibarium. There is also the issue of competition expected between Dogechain and Shibarium, which further increases this correlation.
The problem with such correlations is that they tend to follow both a negative, as well as a positive, path. Consequently, when the price of Shiba Inu began to fall, Dogecoin followed suit with the expectations that both of these properties will go in the same direction.
DOGE price falls alongside SHIB in volatile market conditions | Source: DOGEUSD on Tradingview.com
In addition, DOGE, which is one of the top 10 largest cryptocurrencies in the space, always tracks the performance of Bitcoin closely. So while Bitcoin bounced back from the FOMC meeting, Dogecoin was hit by a double-decker bus, plunging deep into red territory.
Will DOGE Price Recover From Here?
It’s not all bad news for Dogecoin according to crypto analyst “Tony The Bull.” Recently analysis, he pointed out that DOGE has tagged a 1-month parabolic SAR. Now, this is unusual because the last time the meme coin touched this level was back in 2021.
DOGE tags 1M Parabolic SAR | Source: Tony The Bull on X
The result of this is that the price of DOGE went from $0.0018 to more than $0.7. This translates to more than a 24,000% increase over time. So it makes sense that if the altcoin re-tags this 1M parabolic SAR, there could be a rally in the near future.
However, it is unlikely that the DOGE price will actually rise above $50 at this level. This is because the crypto market is still in the peak season of the bear while 2021 is the peak season of the bull. However, a rally towards $0.09 is not out of the question.