Price of Elon Musk-supported cryptocurrency already dropped by 10% after spiking by 21%
Following Elon Musk’s purchase of 9.5% of Twitter shares and rumors about the implementation of Dogecoin on the platform, the price of the first memecoin on the market jumped 21% in a few hours, but it has already lost much of its value.
“Buy the rumor, sell the news”
The first potential reason behind such a swift retrace of the memecoin could be tied to the general belief of traders that says that you should buy the asset when rumors about it appear in the space and sell it after bullish news hit the public space.
The first rumors of Musk’s big buy appeared on April 4 and, as seen on the Doge chart, a large green hourly candle appeared at 10:00 UTC but Doge’s price pulled back immediately afterwards.
As for mass media, the first news articles about Elon Musk’s large purchase appeared on April 5, which is reflected in the price of Doge that rallied by 20% shortly after and then retracted.
Technical resistance
Another factor that could be tied to DOGE’s negative price performance is the 200-day exponential moving average resistance. DOGE was moving below the moving average for the past 124 days and failed to break through on the first try.
Investors do not believe in Doge
For the last five months, Dogecoin has been in a long-term downtrend and are losing over 50% of its value since reaching the local high in December. If we count losses from the ATH, we would see more dramatic numbers.
Since cryptocurrency cannot yield positive results, some traders and investors prefer to sell their holdings whenever price increases cover part of their losses after opening positions close to the ATH.
