Dogecoin soared 23,000% in 2021 — Is history starting to repeat for DOGE price?
Dogecoin’s 2021 and 2023 price rallies have largely been sparked by Elon Musk but the latter still has much more room to run if history repeats. The price of Dogecoin has almost doubled after bottoming out at $0.0491 in June 2022, alongside a similar recovery across the cryptocurrency market.
On April 20, DOGE is trading for as high as $0.0942, up around 94% versus the last year’s bottom. But, despite its impressive rebound, its price is still 88% below its all-time high of $0.76 set in May 2021. Thus, the DOGE/USD pair remains far from establishing a decisive bullish reversal on longer timeframes.
Elon Musk’s Influence on Dogecoin Price
Dogecoin price soared over 23,000% in 2021 primarily due to Elon Musk’s vocal support. Ironically, DOGE/USD topped after Musk called it a “hustle” during his Saturday Night Live appearance in May 2021.
DOGE price entered a prolonged long bearish cycle, furthered by the prospects of the Fed tightening (leading to actual interest rate cuts in 2022 and 2023). Also, the collapse of multiple leading crypto firms, such as Terra (LUNA), Three Arrow Capital, FTX, etc., exacerbated the DOGE selloff.
DOGE’s Recovery and Twitter Takeover Speculation
October 2022 saw a 100% price rebound despite the multi-month downtrend. The recovery coincided with Musk’s shaky takeover of Twitter amid hopes that DOGE would become the social media platform’s official payment token. As of April 2023, Musk has not added a DOGE payment option on Twitter. Though, he briefly replaced the platform’s iconic bluebird logo with Dogecoin’s official mascot, the Shiba Inu meme, earlier in the month. DOGE rallied by up to 40% on the news.
Fundamental Factors Influencing DOGE Price
From a fundamental perspective, speculation can help Dogecoin sustain its year-to-date gains. But the all-time high price is still 700% away, which is likely to happen only it receives wider adoption, such as for Twitter payments.
DOGE Price Technicals
In fractal analysis terms, Dogecoin’s bullish reversal prospects depend on holding above its two key weekly exponential moving averages (EMA). Notably, DOGE price has attempted to close above its 50-week (the red wave) near $0.0917 and 200-week EMA (the blue wave) near $0.0895. That is similar to its sideways action and breakout attempts in April-November 2020 that preceded a 30,000% price rally. DOGE may not undergo a similar 30,000% price rally in 2023 due to conflicting fundamentals. But in the event of the Fed’s interest rate pivot or addition of Dogecoin payments to Twitter, the meme-coin could eye a run-up toward its record high of $0.76 in 2023.
Potential Risks for DOGE Price
Conversely, a reversal from the aforementioned EMAs risks triggering a classic continuation setup called the ascending triangle.
The pattern appears on a chart when the price fluctuates between rising trendline support and horizontal trendline resistance. It typically resolves after the price breaks out in the direction of its previous trend.
As a result of its previous downtrend, DOGE’s ascending triangle appears to favor the bears, eyeing downside targets at lengths equal to the pattern’s maximum height from the potential breakout point.
That puts DOGE’s yearend price target inside the $0.0363-0.0469 range, down 45-60% from the current price levels, respectively.
Conclusion
Dogecoin’s recent price rally and recovery from the 2022 lows have drawn comparisons to its meteoric rise in 2021. While history might not repeat itself entirely, the potential for DOGE to reach new heights in 2023 still exists, especially if it gains wider adoption, such as for Twitter payments. However, investors should also consider the potential risks and technical factors that could lead to a bearish continuation for the meme-inspired cryptocurrency.
