Dogecoin Price Prediction: DOGE is on the Cusp of a Bearish Breakout
- Dogecoin price declined sharply on Friday after the NFP data.
- Investors are also watching Elon Musk's acquisition of Twitter.
Dogecoin price pulled back sharply on Friday as the market reflected on the strong American jobs data. DOGE retreated to a low of $0.062, which was the lowest point since Tuesday this week. It has crashed by more than 65% this year, giving it a market cap of more than $8.2 billion.
More Fed hikes ahead
Dogecoin price sell-off continued as investors priced in a more hawkish Federal Reserve following the latest American jobs data. According to the Bureau of Labor Statistics (BLS), the country added more than 263k jobs in September after it added 315k in the previous month.
The closely-watched unemployment rate dropped from 3.7% in August to 3.5% in September while the wage growth slowed from 5.2% to 5.0%.
Therefore, analysts believe that the Federal Reserve will likely continue hiking interest rates in the coming months. It has already increased rates by 300 basis points and hinted that it will hike by another 125 basis points in November and December.
Historically, riskier assets like stocks and cryptocurrencies tend to underperform in a period of extremely hawkish Fed. For one, these rate hikes have pushed the yield of the 2-year and 10-year government bonds to over 4%. And the US dollar index has risen to the highest level in more than 20 years.
Dogecoin price has also struggled as investors focus on Elon Musk’s decision to buy Twitter for $44 billion. In a statement this week, Musk said that he will go on with the deal.
Still, there is a possibility that he will walk away from the deal if banks walk away. With interest rates rising, banks have struggled to raise cash in the debt market. As such, if this happens, Musk will need to pay the $1 billion break-up fee. A Twitter buyout is seen as being a bullish thing for Dogecoin because Musk is one of its biggest holders and promoters.
Dogecoin price prediction
The daily chart shows that the DOGE price has been in a consolidation phase in the past few days. In this period, the coin has remained slightly above the important support level at $0.057, which was the lowest level on July 14. It is also hovering at the 25-day and 50-day moving averages.
The coin is also forming a head and shoulders pattern. Therefore, the Dogecoin outlook is bearish as investors focus on the Fed action. If this happens, the next key level to watch will be at $0.005.