The price of Dogecoin has been in a sad decline in the second half of 2021 and most of 2022. The reason for this could be that Shiba Inu, the Dogecoin killer, diverted attention from it during its peak mania phase in 2021. Anyway, DOGE is at a delicate level, a failure of which could lead to a precipitous crash.
To crash or not
The price of Dogecoin is down about 82% from its all-time high in May 2021 to where it currently trades – $0.126. This downturn is similar to the crashes seen in the bear market, indicating an oversold nature of the DOGE market.
The current level trading Dogecoin price is crucial as it is the last line of defense. The volume profile indicator indicates that the volume traded below USD 0.126 does not exist. Thus, any movement to this area will lead to a rapid downturn with little to no container resistance.
Therefore, a crash will bring DOGE down to the first support level of $0.085, which is the first place Dogecoin investors try to accumulate and form a bottom.
However, if selling pressure is strong, the meme coin could slide downward and revisit the $0.063 support level, where significant volume traded in early 2021.
Assuming DOGE retests the $0.063 barrier, it would roughly represent a 50% crash from its current position and a whopping 90% drop from its peak.
Adding credibility to the recent collapse in DOGE prices could be the recent spike in funding rate. This statistic reveals the state of the traders and their view of Dogecoin. A moderate funding ratio could mean that sentiment is balanced. Very positive funding can indicate greed and can also mark local peaks.
In the past two months, any spike in funding above 0.01% has been met with selling pressures limiting the upside potential for DOGE. The recent increase also reached 0.01% and is currently going down.
On a complex note, the potential crash for DOGE makes sense from a technical perspective. However, it requires a catalytic converter to activate it and push it past the fences. And the key here would be the ongoing war between Russia and Ukraine.
Over the past three days, this situation has escalated to a point where Russia might consider nuclear weapons. This could be a turning point in this war and a key to another 50% crash.
Since the Russian attacks take place near the nuclear power plant in Ukraine. Therefore, it constitutes a catastrophic meltdown that could crash global economies and cryptocurrencies. Therefore, considering all these scenarios, investors should be in a risk-free mode.
This post Dogecoin: In light of this, should investors be in a risk mode?
was published first on https://ambcrypto.com/dogecoin-price-risks-50-crash-should-investors-be-in-a-risk-off-mode/