- Dogecoin explodes on Elon Musk Twitter acquisition
- Dogecoin pullback, bounce back stalls
- Dogecoin long term bullish outlook
After a 30% plus rally early in the week, the meme coin came under immense short-selling pressure, all but thwarting a break out above a key resistance level. The rally came as traders reacted to Elon Musk announcing plans to acquire Twitter for $43 billion.
DOGE enthusiasts, Musk’s rhetoric have positively impacted DOGE sentiments in the market, which explains the blockbuster, move up. However, the meme coin has given back a good chunk of the gains and currently struggling for direction.
Dogecoin technical analysis
The deep pullback could be attributed to traders taking profits resulting in the coin dropping to a key support level. DOGEUSD remains well supported above the $0.133 area, which has emerged as a support level. The coin holding above this level should affirm the prospect of bouncing back to the $0.17 area, the immediate resistance level.
DOGEUSD bulls have struggled to steer DOGEUSD above the $0.17 area. The coin has been rejected two times at this level. Consequently, any rally followed by a daily close above the resistance level should affirm the emerging uptrend setting the stage for Dogecoin to make a run for the $0.20 area.
Why is Dogecoin rallying?
Dogecoin Twitter Blue integration
In recent days, Dogecoin has been explosive on the Tesla CEO reaching an agreement to acquire social networking giant Twitter for $43 billion. Reports that Musk could push for Twitter Blue users to pay for their subscription using Dogecoin is one factor that has offered support to the meme coin.
Integrating Dogecoin as a payment option on Twitter would mark an important milestone for a coin that does not have many use cases. To date, Dogecoin price action has mostly been fuelled by speculation and rhetoric by high-profile personalities. Conversely, the unveiling of a proper use case in the form of payments would go a long way in strengthening its sentiments in the market.
Dogecoin’s long-term prospects are highly dependent on whether it can carve a niche for itself around payments. Musk has been striving for the integration of DOGE on this front, having pushed Tesla to accept it as a payment option for some of its merchandise.
The billionaire investor has also touted Dogecoin as a better option for payments, given the low transaction volume for Bitcoin and the high costs. According to Musk, Bitcoin is not a good substitute as a transactional currency as Dogecoin has a much higher potential than Bitcoin.
Dollar strength impact
As dogecoin use cases continue to show signs of improvement, the coin’s long-term outlook remains bullish. However, the coin could remain under pressure in the short term, as is the case with the overall cryptocurrency market.
The cryptocurrency market has struggled to bounce back due to persistent dollar strength. The US dollar strengthening across the board to two-year highs has only pilled pressure on cryptocurrencies as investors shift their attention to high yield investments.
The dollar strength is being fuelled by expectations that the FED will hike interest rates aggressively in a bid to clamp down on runaway inflation. The expectations have only gone to fuel a rally of treasury yields prompting investors to switch their attention to assets that benefit from high yields and expectations for rate hikes.
As a speculative asset, dogecoin could remain under pressure in the short term amid the dollar strength and a shift away from speculative assets. However, its long-term outlook remains bullish as the coin use case continue to improve amid talk of Twitter integration.