Dogecoin price drops by 10% in a matter of hours: 3 reasons why

Arman Shirinyan

Price of Elon Musk-backed cryptocurrency already down 10% after peaking 21%

After the purchase of 9.5% of Twitter shares by Elon Musk and rumors of the implementation of Dogecoin on the platform, the price of the first memecoin on the market rose by 21% in a few hours, but it already has a large lost some of its value.

“Buy the rumour, sell the news”

The first possible reason behind such a rapid retrace of the memecoin may be related to the general belief of traders that you should buy the asset when rumors about it appear in the space and sell it after bullish news hits the public space.

Source: Trading Display

The first rumors of Musk’s big buy appeared on April 4 and, as we can see on the Doge chart, a large green candle per hour appeared at 10:00 am UTC, but Doge’s price bounced back immediately after.

As for the mass media, the first news articles about the big purchase of Elon Musk appeared on April 5, which is reflected in the price of Doge which rose 20% shortly after and then was withdrawn.

Technical resistance:

Another factor that can be linked to DOGE’s negative price performance is the 200-day exponential moving average resistance. DOGE has been moving below the moving average for the past 124 days and failed to break through from the first attempt.

Investors don’t believe in Doge

For the past five months, Dogecoin has been in a prolonged downtrend, losing more than 50% of its value since hitting the local high in December. If we count the losses of the ATH, we would see more dramatic numbers.

Since the cryptocurrency cannot deliver positive results, some traders and investors prefer to sell their holdings when price surges cover some of their losses after opening positions near the ATH.

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