Elon Musk-Backed Cryptocurrency Has Already Dropped 10% After Gaining 21%
The price of Memecoin, the first on the market, rose 21% in a matter of hours after Elon Musk’s purchase of 9.5% of Twitter shares and rumors about Dogecoin’s implementation on the platform, but it has already lost a substantial portion of its value. Is.
“Buy rumours, sell news”
The first possible reason behind such a rapid return of Memecoin could be related to the common belief of traders that says that you should buy the asset when rumors about it appear in the space and sell it after the bullish news in the public space. .
The first rumors of a major Musk buy surfaced on April 4th, and as we can see on the Doge chart, a large green hourly candle appeared at 10 a.m. UTC, but Doge’s price quickly bounced back.
For the mass media, the first news articles about Elon Musk’s major purchase appeared on April 5th, reflected in the price of Doge, which rose 20% shortly after and then pulled back.
technical resistance
Another factor that may be linked to the negative price performance of DOGE is the 200-day exponential moving average resistance. DOGE was moving under the moving average for the past 124 days and failed to break through on the first attempt.
Investors don’t have faith in Doge
For the past five months, Dogecoin has been in a prolonged downtrend and has been losing over 50% of its value since reaching a local high in December. If we calculate the loss from ATH, we will see more dramatic numbers.
Since the cryptocurrency may not produce positive results, some traders and investors prefer to sell their holdings whenever the price rally covers some of their losses after opening positions near ATH.