Dogecoin (DOGE) is down 20% in the past 24 hours after a 100% rally on Friday. The cryptocurrency “meme” still has a market capitalization of more than $ 1 billion and a trading volume of $ 2 billion last day.
Dogecoin started a rally a few weeks ago after Elon Musk, CEO of Tesla and SpaceX, reminded the market of the asset. Despite the latest correction, DOGE is still up 100% in the past two weeks.
DOGE’s ongoing correction is coming despite the general strength of the altcoin market. For example, Ethereum is up 35% against the US dollar in the past 24 hours as the capital cycle switches from BTC to altcoins. Bitcoin Cash and Litecoin are also increasing.
Here are some reasons DOGE could fall despite the widespread outperformance of altcoins.
Related Reading: Wall Street Veteran Kickstart’s Own Bitcoin Fund with a $ 25M investment
# 1: Dogecoin was a high beta bitcoin game
For the past few weeks, Dogecoin has acted as a high beta bitcoin game. That said, it was trading similar to BTC, but with higher overall volatility.
When BTC gained 10% on Friday, DOGE had seen a 100% gain. Although the correlation is not perfect, it has continued to this day.
Bitcoin is down 7.5% in the past 24 hours while DOGE is down 22.5% from yesterday’s value.
This chart shows how the value of DOGE correlates with Bitcoin, but it has increased volatility over time. However, this volatility has increased dramatically in the past few days, as the graph clearly shows.
This could stay that way for the near future as long as there is a strong retail contingent in the Dogecoin market, which has long been the case. The market can also be relatively illiquid compared to other large-cap altcoins.
Chart of DOGE's price action over the past month from TradingView.com
Related reading: DeFi Founder Targeting $ 8M Hack Says He Got His Hacker’s IP
# 2: DOGE Market has been overbought
While the Dogecoin rally was a long time coming, the market was quickly overbought as the cryptocurrency gained 100% in a single trading day.
While there is no perfect measure of how much a market is overbought, there are few markets where an asset that has appreciated 100% in a single trading session can continue to rise in the next.
After overstretching, the markets will retreat far beyond the “normal” price regions.
It is also likely that Dogecoin’s capital has moved into more attractive altcoins like Ethereum and Cardano.
DeFi altcoins have also performed very well in the past 24 hours.
Currently, DOGE’s entire trajectory is likely determined by Bitcoin.
Related Topics: 3 Bitcoin On-Chain Trends Show A Macro Bull Market Is Brewing
Featured Image from Unsplash Chart from TradingView.com Price Tags: dogeusd, dogebtc Two Key Reasons Why Dogecoin (DOGE) Just Dove 20% Under $0.01