Dogecoin (DOGE) price came under the crosshairs after a few cryptocurrencies saw massive sell-offs after Stablecoins had issues maintaining their peg to another asset. The best example was Tether, where the peg with the dollar was let loose this week as the dollar steamrolled through the markets. Maintaining a peg, where the price remains the same in value with the asset, requires massive volume and underlying assets as backup in case the peg needs defending via devaluation or appreciation of the underlying asset.
Plenty of questions around the solvability and not getting any responses from Tether or any other company have dented investor confidence. With massive capital outflows in all corners of cryptocurrencies, it is questionable how supportive this recovery will be. In case Dogecoin price is in a dead-cat-bounce, expect to see by the weekend a drop below $0.0817, before shedding more value towards $0.0484.
Although recovering intraday, Dogecoin price is still nowhere near fundamentally breaking its longer-term downward trajectory. To the upside, DOGE price faces several vital levels turned into resistance after the sharp correction this week. Additionally, if price action can rally above there, DOGE investors face some heavy resistance coming in, with the 55-day Simple Moving Average (SMA) as the first hurdle at $0.1137 and further up at $0.1357, and then the red descending trendline, followed by the 200-day SMA as just symmetrical just above there and a historic pivotal level.
DOGE price thus has no room to make significant moves to the upside because of the lack of credibility and the fact that the path of recovery faces just too many hurdles. Expect a drop that will spiral to $0.0484, which is a crucial low level in April 2021. A few cents above there, the monthly S3 support level is present, so that could catch the descent, but it will crack once Tether needs to admit it can no longer maintain its peg or, if it defaults, which would make DOGE price tank to $0.0070.0.
DOGE/USD daily chart
When investors can get reassured about the financial stability of cryptocurrencies and their assets in stablecoins, expect to see investors come back with even more money to spend. DOGE price would then see a massive rally, piercing through the previously mentioned caps like a warm knife through butter. DOGE price would then quickly be testing the 55-day SMA at $0.1137 and could break above the 200-day SMA and the red descending trendline to lift price action to $0.1900.
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