Dogecoin (DOGE) Market Cap Hits 3-Month Low as Confidence Wanes

Key Takeaways

• Dogecoin’s market cap has fallen from $60 billion to $37 billion in three months.
• This decline happened due to the falling price and trading volume around the coin.
• DOGE’s setup remains weak, with indicators revealing a possible decline below $0.20.

The last 90 days have been horrible for Dogecoin’s (DOGE) price. The memecoin has shed 37.60% of its market value within this period.

Beyond the price, Dogecoin’s market cap has also notably declined.

Given this situation, sentiment around the cryptocurrency has remained bearish. But what does the short-term hold for DOGE?

Dogecoin Faces Brutal Sell-Offs

On Jan. 17, Dogecoin’s market cap was above $60 billion. Today, the same figure has dropped to $37.11 billion.

This marks the lowest Dogecoin market cap since Nov. 10, 2024, when it hit a three-month low. Market cap is a product of price and circulating supply.

The total supply of $147.98 billion coins is already in circulation for DOGE. Therefore, the decline in market cap occurred because Dogecoin’s price failed to recover to $0.47 — a value it hit last December.

So, if the memecoin’s price continues to drop, its market cap will follow the same direction.

Another factor hinting at a further fall in DOGE’s price is its volume. In November 2024, Dogecoin’s trading volume was over $40 billion.

This rise in volume coincided with Donald Trump’s election victory, which was a positive sign for the crypto market at large. The anticipated establishment of the Department of Government Efficiency (D.O.G.E) also contributed to the surging volume.

However, while D.O.G.E has started in full swing, the memecoin’s volume has dropped to $1.47 billion. Typically, rising volume is a bullish sign.

But when volume drops, it indicates fading investor confidence. If this is sustained, it puts downward pressure on the price, and DOGE is likely to experience this.

DOGE Price Prediction: Further Downside Ahead

On the daily chart, Dogecoin’s price has broken below the support at $0.31. This breakdown is one key reason it trades at $0.25 at the time of writing.

The Relative Strength Index (RSI) is in a downtrend, as shown in the image below. This decline indicates bearish momentum around DOGE while reinforcing the thesis of falling demand.

In addition, the Awesome Oscillator (AO) appears to be in a similar position to the RSI. As seen below, the AO reading is negative, indicating that the 34-period moving average is greater than the 5-period moving average.

Should this trend continue, Dogecoin’s price might drop to $0.19. However, if the RSI reading decreases below 30.00, DOGE would be deemed oversold.

Once oversold, this could lead to the meme coin’s price reversing upwards. In this situation, DOGE’s price might bounce toward $0.40.

If validated, Dogecoin’s market cap might also benefit from this rebound and rise much higher than $1.47 billion.