Why is Dogecoin price down today?

Dogecoin (DOGE) is down 6% today, hitting an intraday low of $0.3404 on Dec. 19. This decline outpaces the broader crypto market, which fell around 3.5% over the same period. The dip in DOGE follows Bitcoin’s (BTC) 2% drop in the past 24 hours.

What are the main factors behind DOGE’s pullback today?

Dogecoin price drops on “sell the news” rate cut

The bullish sentiment was not only exclusive to Dogecoin as most other memecoins recorded significant losses across the board, triggered by Bitcoin’s drop to $100,000 following US Federal Reserve Chair Jerome Powell’s post-cut presser on Dec. 18. 

Shiba Inu (SHIB), the second largest memecoin by market capitalization, followed DOGE’s steps, dropping 5.8% over the last 24 hours to trade at $0.00002433.

Ethereum-based Pepe (PEPE) has dropped by approximately 11% over the same period.

Peanut the Squirrel (PNUT) posted the most losses on Dec. 19, dropping by more than 19% on the day to exchange hands at $0.8152.

This bearish performance has wiped out more than $10 billion from the memecoin market over the last 24 hours alone. Meanwhile, the total daily trading volume across the memecoin sector has jumped nearly 50%.

The risk-off mode among memecoin investors comes after the US central bank reduced interest rates by 25 basis points on Dec. 18. While the market had expected this cut, Powell’s indication that only two more rate cuts would occur in 2025 sent the market tumbling.

Related: Stablecoins will see explosive growth in 2025 as world embraces asset class

Moreover, the Fed committee also took a more hawkish stance by raising their 2025 inflation outlook from 2.1% to 2.5%, opening the door for potential rate hikes in the future.

DOGE market sentiment sours

The ongoing drawdown on DOGE price was also preceded by reducing market sentiment over the dog-themed memecoin which turned negative on Dec. 3, as per data from Santiment.

This suggests that traders have become impatient as DOGE prices have been consolidating for the past month.

While the negative sentiment may signal a bearish outlook, the price often goes in the opposite direction of the crowd. As a result, DOGE could see a bounce back to overcome key resistance levels if current support levels hold.

DOGE’s bearish divergence

DOGE’s drop today precedes a period of growing bearish divergence between its price and the relative strength index (RSI).

The daily chart below shows that the DOGE/USD pair rose between Nov. 12 and Dec. 8, forming higher lows. But, in the same period, its daily RSI descended from 92 to 51, forming lower lows.

As a rule of technical analysis, a divergence between rising prices and a falling RSI indicates weakness in the prevailing uptrend, prompting traders to sell more at local highs.

The chart above also shows stiff resistance overhead, stifling DOGE’s efforts to rise higher. These are areas of the $0.40 to $0.42 supplier-congestion zone and the resistance level at $0.47. Bulls are required to overcome these barriers to continue the uptrend.

Professional trader Natalie Dormer argues that the pullback saw the Dogecoin price drop to a key support level of around $0.35 (the 50-day exponential moving average in the chart above), which the DOGE bulls should ideally hold.

“Remember, pullbacks and volatility do happen in any uptrend, but our structure still favors upside for $DOGEUSD,” said Dormer.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.