The Dogecoin price has been eerily calm. ‘SNL’ has passed, Elon’s gone quiet, and Crypto markets are dull. I sense this won’t last for long.
DOGE is last trading $0.3059, down $0.0128 (-4.11%).
Considering the hype surrounding Dogecoin at the start of this year, the last month has been remarkably eventless.
Considering that DOGE has dropped 60% from its May $0.7600 high, it’s hard to think of a better performer over the last 6 months. In 2021 alone, the meme coin has gained over 6,000%.
In the first 5 months of the year, Doge was everywhere. Celebrity billionaire endorsements from Elon Musk and Mark Cuban added fuel to the already blazing Dogecoin price. The price and the hype reached a climax on May 7th, the day before Musk’s hotly-anticipated Saturday Night Live appearance.
The ‘Dogefather’ did mention the dog-themed cryptocurrency. Only, he labeled DOGE a “hustle.” Probably not the glowing reference the Dogecoin faithful were hoping for.
The Tesla CEO’s fascination with crypto didn’t stop there., although he turned his attention to Bitcoin. After previously adding $1.5 billion of BTC to Tesla’s balance sheet, he promptly u-turned, attacking Bitcoin’s green credentials.
This triggered the start of a bear market for Bitcoin but also crushed the Dogecoin price.
On the 19th of May, Dogecoin traded as low as $0.1950 before recovering to $0.4540 in the following 2 weeks. Currently, the price has retraced just over 50% of that bounce and is wedged between two trend lines.
On the 4-hour price chart, we can see that since Doge has been trading a tightening band. Triangle formations are formed when a market trades in a narrowing range. Typically, as the range narrows, volatility often declines.
Periods of low volatility can often result in a period of the opposite.
Dogecoin volatility has been trending lower for the last month. However, considering the price is 6000% higher than when it started the year, this is unlikely to continue. The only issue is until the Dogecoin price breaks free from the triangle, we won’t know which direction the volatility will take it.
Below $0.2800 could be the trigger for a sharp sell-off which a volatility breakout could exacerbate.
Alternatively, if DOGE breaks out of the pennant formation above $0.3400, this may prove the trigger for a violent upside move.
Given the current broader weakness in crypto, the downside looks likeliest. However, I wouldn’t discount either eventually.
I would, however, be confident in saying what comes next might be a memorable event.
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