Dogecoin’s Muted January
Dogecoin (DOGE), the cryptocurrency that powers the Shiba Inu meme-inspired Dogecoin blockchain, has had a good January. The world’s largest and most popular meme cryptocurrency has gained an impressive 24% since the start of the year and was last changing hands around $0.087, up over 30% from last December’s lows under $0.07.
But Dogecoin’s rally is muted compared to that seen in other major cryptocurrencies such as Bitcoin and Ethereum, which are both up closer to 40% this month, and compared to many altcoins, many of which have posted gains north of 100%.
The cryptocurrency has seen a resurgence of risk-taking behavior amid bets that, amid a mounting pile of evidence that US inflation and growth are both rapidly slowing, the Fed will take a softer approach to monetary tightening from here on out – this has triggered an easing of financial conditions in recent weeks (such as US yields dropping), which tends to boost risky assets like crypto.
Is Dogecoin Due a Massive Breakout?
Some analysts and traders think that Dogecoin might be due a surge higher amid a catch up to the resurgence of the broader cryptocurrency market, which has been racing ahead of it. According to Twitter user @rektcapital, Dogecoin is currently testing the top of a falling wedge technical structure.
— Rekt Capital (@rektcapital) January 22, 2023
A break above this structure could open the door to a rapid surge back to the cryptocurrency’s Q4 2022 peaks in the $0.16 area. That would mark an 80% gain from current levels. With Solana up 140% and Avalanche up north of 60% in the last 30 days, such a rally in Dogecoin shouldn’t be ruled out as unfeasible.
An Ascending Triangle Breakout Could Be the Trigger
Dogecoin’s shorter-term technicals are looking good. The cryptocurrency respected an uptrend that start at the end of December well so far this month. However, prices are currently being squeezed by resistance in the $0.930 area, suggesting that Dogecoin is forming an ascending triangle.
Ascending triangles are typically viewed as bullish technical structures. A breakout of the current bullish pattern could be the trigger that the Dogecoin bulls need to force a rapid breakout of the longer-term falling wedge pattern noted by @rektcapital.
As the cryptocurrency rally continues, Dogecoin investors have much to (potentially) be excited about. Amid widespread hopes that 2022’s crypto bear market is over, and that 2023 will be a much better year (with an easing rather than tightening bias from the Fed), risks are tilted towards rallying and holding above $0.10. A challenge of all-time highs in the $0.76 area will probably have to wait for the Fed to start cutting interest rates to zero once again, however, which may be a few years off.
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