Dogecoin’s price has pulled back as the broader cryptocurrency market adjusts to disappointing U.S. GDP growth data and its potential implications for the Fed’s next move.
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Dogecoin (DOGE) price is down today as the wider crypto market undergoes a sharp correction.
Notably, on April 27, DOGE’s price dropped 4.82% to around $0.15, underperforming the crypto market, whose valuation fell 2.25% on the same day. The memecoin has plunged by 38% when measured from its local top of $0.229, established a month ago.
Let’s take a closer look at the most likely reasons behind Dogecoin’s latest pullback.
Declining rate cut prospects hurt Dogecoin demand
Dogecoin’s drop today is part of a broader crypto market downtrend that started after the release of the U.S. gross domestic product (GDP) on April 25.
Notably, the U.S. economy’s growth was 1.6% in the first quarter of 2024, against expectations of 2.5%. At the same time, personal consumption expenditures rose 0.3% in March.
In response to these underwhelming economic indicators, swap traders have scaled back their expectations for Federal Reserve interest rate cuts in 2024 to just 33 basis points, a significant reduction from the more than six quarter-point cuts expected earlier in the year.
Expectations of sustained high interest rates pushed the yield on the benchmark U.S. 10-year Treasury note to 4.739% on April 24, its highest level in five months.
The yield has been hovering around the same level ever since, reducing the appeal of riskier crypto assets. For example, on the day the yield peaked, five spot Bitcoin exchange-traded funds (ETF) experienced outflows totaling $217 million.
Declining Dogecoin open interest and funding rates
Dogecoin open interest (OI) has dropped to $865.63 million on April 27 from its local peak of $2.21 billion from almost a month ago. Meanwhile, the funding rate is now 0.0063% per eight hours.
Together, both the decline in OI and the low funding rate points to a bearish sentiment prevailing in the market. This indicates that traders are either taking a cautious approach due to uncertainty about Dogecoin’s future price movements or that the overall interest in trading Dogecoin with high leverage has diminished.
Related: Will Dogecoin skyrocket 7 months after the Bitcoin halving again?
DOGE price technical pullback
Today’s decline in Dogecoin’s price seems to be a continuation of a selling trend that began when the price hit a resistance area marked by a descending trendline and the 50-day exponential moving average (50-day EMA; the red wave in the chart below).
In particular, the descending trendline resistance has capped DOGE’s upside attempts multiple times in the past 30 days.
As of April 27, the cryptocurrency was testing its multi-week ascending trendline support for a potential rebound. Doing so will likely send the price toward the descending trendline resistance at around $0.159 by April’s end.
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.
