Dogecoin (DOGE), the well-known meme cryptocurrency, experienced a turbulent week, shedding 19.97% of its value over the past seven days. As of February 3, 2025, DOGE is trading at $0.2474, following a sharp decline from its weekly high of $0.3340. Despite the downtrend, Dogecoin remains a key player in the crypto ecosystem, especially with increasing institutional interest and ETF speculation.
Read more: Ethereum Tanks 18% in a Week: Is This a Buying Opportunity or a Warning Sign?
FROM $0.33 TO $0.24: WHAT CAUSED DOGECOIN’S SHARP DECLINE?
Dogecoin kicked off the week trading around $0.3091, showing strength as it attempted to break past $0.33. The market sentiment was initially bullish, fueled by news of Grayscale’s new Dogecoin investment fund for accredited investors, reinforcing DOGE’s shift from a meme coin to a serious financial asset.
However, the situation rapidly changed. As the week progressed, DOGE faced mounting sell pressure, falling below $0.30 by February 2, before plummeting further to $0.2474 on February 3. This steep decline coincided with a 341.75% surge in 24-hour trading volume, reaching $10.45 billion, signaling panic selling and liquidations across the market.
Key Market Metrics and Insights
- Market Capitalization: Dropped 18.66%, now standing at $36.58 billion.
- 24-Hour Trading Volume: Skyrocketed 341.75% to $10.45 billion, indicating a highly active trading session.
- Volume-to-Market Cap Ratio: At 28.34%, showing significant trading activity relative to DOGE’s market cap.
- Circulating Supply: Remains at 147.88 billion DOGE, reinforcing that the decline is driven by market sentiment rather than an increase in supply.
Factors Driving Dogecoin’s Decline
Several key factors contributed to DOGE’s recent downturn:
- Profit-Taking After a Strong Rally: Following DOGE’s climb to $0.3340, traders likely took profits, leading to a wave of selling pressure.
- Broader Market Weakness: The crypto market faced a correction, with major assets like Bitcoin and Ethereum experiencing sharp declines, dragging DOGE down alongside them.
- Leverage Liquidations: The spike in trading volume suggests forced liquidations of leveraged long positions, accelerating the price drop.
- Technical Breakdown: DOGE failed to hold key support at $0.30, triggering a further sell-off towards $0.24.
DOGE ETF SPECULATION HEATS UP AMID MARKET TURMOIL
Despite the price drop, institutional interest in Dogecoin remains strong. The possibility of a spot Dogecoin ETF approval is gaining traction, with Polymarket data showing 56% odds of approval, up from 27% earlier in the month. Additionally, both Rex Shares and Bitwise have filed for a DOGE ETF, indicating growing institutional appetite for the asset.
TECHNICAL BREAKDOWN: CAN DOGE HOLD ITS KEY SUPPORT LEVEL?
From a technical perspective, Dogecoin is currently testing critical support levels:
- Support: The next major support is around $0.2278, a crucial level that previously acted as resistance in March.
- Resistance: DOGE needs to reclaim $0.27-$0.30 to regain bullish momentum.
- Bullish Indicators: A potential bullish pennant pattern is forming, often preceding a breakout.
- Elliott Wave Theory: DOGE is currently in the fourth wave, suggesting that a final bullish wave could be on the horizon if momentum returns.
TRADERS REACT TO DOGE’S PRICE CRASH: WHAT COMES NEXT?
Dogecoin’s 19.97% decline has raised concerns, but strong fundamentals and institutional interest continue to support its long-term potential. The sharp increase in trading volume indicates that traders are actively repositioning, and with ETF speculation heating up, DOGE could see renewed buying interest in the coming weeks.
As always, investors should monitor key support and resistance levels, broader market trends, and ETF approval developments to navigate the volatility effectively.
