- DOGEUSD edges lower in the fizzling upward momentum.
- Whitehouse embarks on cryptocurrency study.
- Regulatory concern triggers jitters among traders.
Cryptocurrencies came under pressure on Thursday amid growing concerns about the kind of regulation that could be coming to the industry from the US. Reports that President Joe Biden is trying to push for regulation appear to have spooked investors, triggering a sell-off in the broader industry.
Dogecoin (DOGEUSD) is one of the coins that came under pressure going down by about 5%. While the sell-off appears to have steadied Friday morning, the meme coin remains under pressure on the recent bounce back stalling.
DOGEUSD technical analysis
A bounce back from lows of $0.12 that started in January has stalled, with bulls experiencing strong resistance near the $0.17 level. A drop below the $0.15 level has left DOGEUSD susceptible to further losses, back to 52-week lows near the $0.12 level.
A daily close below $0.13 could be the catalyst to attract more short-sellers, resulting in DOGEUSD tanking to 52-week lows. On the flip side, bulls need to fuel a rally past the $0.15 level to avert the prospect of the meme coin losing more value after the recent pullback.
With the Relative Strength Index indicator on the daily chart below 50, bearish momentum appears to be in full swing. With DOGEUSD trading below the 200-day moving average, the prospect of the coin edging lower is still high.
The uncertainty around the kind of regulation the White House is likely to push for is likely to continue affirming further moves to the downside on the DOGUSD pair. Immediate reports indicate that President Biden has asked a variety of agencies to study digital currencies and other digital assets. The agencies include the Department of Treasury, Justice, and Homeland Security.
The regulatory push comes amid growing concerns about the risk to financial stability emanating from cryptocurrencies. The agencies are to study some of the risks posed by virtual currencies, a development that could lead to regulations aimed at protecting the public.
DOGEUSD has been trading in line with the broader cryptocurrency market lately. The overall market edging higher has also resulted in higher meme coin edging. Similarly, the coin has come under pressure on the broader sector.
Cryptocurrencies and stock market direct correlation have also been evident over the past few months. A sell-off wave in the equity market has often been followed with a similar reaction in the cryptocurrency market, with Dogecoin feeling the brunt.
Growing tensions at the Ukrainian border with Russia is one of the catalysts fuelling concerns among the investment community. Increasing concerns about the Russian invasion have left investors scampering for safety in the US dollar and gold safe haven, all but fuelling a sell-off of riskier assets such as Dogecoin.
Fading social media hype
The deep DOGEUSD sell-off from record highs has also affirmed that the social media hype which has been driving its upward momentum is not sustainable. Dogecoin’s limited real-world utility and a lack of a competitive edge against other high-profile coins, such as Ethereum and Bitcoin, have been one of its biggest undoing.
Ever since DOGEUSD peaked in May of last year, it has come down crashing on the emergency of other hype coins such as Shiba Inu. The lack of something concrete to draw attention to the coin might explain its underperformance.
While Dogecoin has been a huge winner since it came into being, its long-term prospects are unclear given its limited use case and the lack of competitive edge to rival other established cryptocurrency projects.