Anika Begay
Dogecoin (DOGE) has suffered a massive decline in the last 24 hours and has been one of the hardest hit tokens among the widespread downward trend in the cryptocurrency market. Thanks to this, the leading meme coin has fallen to levels not seen since February of this year.
The Reason for the Dogecoin Price Crash
Dogecoin suffered this significant price drop thanks to its strong positive price correlation with Bitcoin. Data from the market intelligence platform In the Block shows that Dgecoin’s price correlation with Bitcoin is currently 0.95, which is about the peak of a strong positive price correlation that any asset can have with its flagship cryptocurrency.
As such, Dogecoin has simply followed the same path as Bitcoin, with the flagship cryptocurrency dropping more than 11% in the last 24 hours and to price levels not seen since the beginning of the year. The price drops of Bitcoin and Dogecoin can be attributed to the current macroeconomic situation in the United States and globally.
THE July Employment Report suggested that the US economy may be in worse shape than many imagine, with unemployment rising to a higher-than-expected 4.3%. This has raised concerns among cryptocurrency traders who are risking assets such as Dogecoin will likely be the hardest hit if the situation worsens.
THE Federal Reserve hasn’t helped matters either, as it continues to dither on its interest rate cuts. This has led to a decline in bullish sentiment among cryptocurrency investors, as there were projections that these interest rate cuts would come even sooner than now. Higher interest rates are bearish for the cryptocurrency market, as investors have less to spend on these risky assets, including Dogecoin.
Meanwhile, the actions of the Bank of Japan are believed to have triggered a domino effect, which is also hurting the prices of Bitcoin and Dogecoin. Last week, the Japanese central bank increased its benchmark interest rate, which immediately led to a massive crash in the Nikkei (the Japanese stock market). This development seems to have spread to the US stock market and the cryptocurrency market, given how both markets reacted.
A buying opportunity on the downside?
Cryptocurrency Analyst Crypto Kaleo has suggested that the recent price drop in Dogecoin is the perfect opportunity to “buy the dip,” especially with his prediction that the leading meme coin will still rise to $1 later this running of the bullsBased on this, he said that the Dogecoin price crash is a “gift,” even though many might perceive it as painful.
Dogecoin Investors may have the opportunity to stake the meme coin at greater discounts, with Crypto Kaleo predict that DOGE could still drop to $0.07. He added that there would be no more pain after the drop to $0.07 and that investors only need to wait a few months before Dogecoin finally hits $1.
At the time of writing, Dogecoin is trading at around $0.08, down more than 21% in the last 24 hours, according to data from CoinMarketCap.
Featured image created with Dall.E, chart from Tradingview.com
