Dogecoin (DOGE) has experienced a massive decline in the last 24 hours and has been one of the most affected tokens amid the widespread downtrend in the crypto market. Thanks to this, the foremost meme coin has dropped to levels not seen since February earlier this year.
The Reason For The Dogecoin Price Crash
Dogecoin has suffered this significant price crash thanks to its strong positive price correlation with Bitcoin. Data from the market intelligence platform IntoTheBlock shows that Dgecoin’s price correlation with Bitcoin is currently at 0.95, which is almost the peak of a strong positive price correlation that any asset can have with the flagship crypto.
As such, Dogecoin has simply walked the same path as Bitcoin, with the flagship crypto down over 11% in the last 24 hours and down to price levels not seen since the beginning of the year. Bitcoin and Dogecoin’s price declines can be attributed to the current macroeconomic situation in the US and globally.
The July jobs report suggested that the US economy might be in a worse state than many imagine, with unemployment soaring to 4.3%, higher than expectations. This has raised concerns among crypto traders that risk assets like Dogecoin are likely to be most affected if things get worse.
The Federal Reserve has also not helped matters as it continues to stall on cutting interest rates. This has led to a dwindling bullish sentiment among crypto investors since there were projections that these interest rate cuts would come even before now. Higher interest rates are bearish for the crypto market since investors have less to spend on these risk assets, including Dogecoin.
Meanwhile, the actions of the Bank of Japan are also believed to have sparked off a domino effect, which is also hurting Bitcoin and Dogecoin’s prices. Last week, Japan’s central bank raised its benchmark interest rate, which immediately led to a massive plunge in the Nikkei (Japan’s stock exchange). This development looks to have extended to the US stock market and the crypto market, seeing how both markets have reacted.
A Buy The Dip Opportunity?
Crypto analyst Crypto Kaleo has suggested that Dogecoin’s recent price drop is the perfect ‘buy the dip’ opportunity, especially with his prediction that the foremost meme coin will still rise to $1 later in this bull run. Based on this, he opined that Dogecoin’s price crash is a “gift,” although many might perceive it as painful.
Dogecoin investors might have the opportunity to stake the meme coin at more discounts, with Crypto Kaleo predicting that DOGE might still drop to as low as $0.07. He added that there would be no more pain after the drop to $0.07 and that investors just have to wait a few months before Dogecoin finally reaches $1.
At the time of writing, Dogecoin is trading at around $0.08, down over 21% in the last 24 hours, according to data from CoinMarketCap.
Featured image created with Dall.E, chart from Tradingview.com
