Dogecoin (DOGE), the largest meme coin in the cryptocurrency market, has faced a significant downturn, falling by 6% on January 8, 2025. This decline marks its lowest point in almost a week, with the price dropping to $0.3415. As sentiment worsens across the crypto space, the question remains: will Dogecoin bounce back?

Price Decline and Market Volatility

Dogecoin’s recent dip comes amid a broader market downturn, exacerbated by rising US bond yields. The cryptocurrency market saw a surge in trading volume, with over $5.26 billion worth of tokens changing hands, up from the previous day’s $3.3 billion. This spike indicates that some investors are liquidating their positions as prices fall, leading to a sharp drop in DOGE’s value.

On January 7 and 8, liquidations worth $35 million were triggered. These large liquidations, particularly of bullish positions, had a profound impact on Dogecoin’s price, causing further losses. In fact, bullish trades worth $20 million were closed on January 7, followed by another $15 million on January 8. Such large-scale liquidations often result in a quick, sharp decline as exchanges automatically close leveraged positions.

Lack of Positive Catalysts

Despite the volatility, there are several factors keeping investors cautious. Dogecoin’s funding rate remains positive, indicating that demand for long positions has decreased. Additionally, the chances of the US Securities and Exchange Commission approving a DOGE exchange-traded fund (ETF) remain slim. Polymarket data shows that the odds of approval fell by 13%, down to 36% on January 7, further dampening investor sentiment.

Further pressure on the market is coming from broader financial conditions. US bond yields are climbing, and that’s putting a strain on risky assets, including cryptocurrencies. With investor caution high and few positive developments for DOGE, it’s difficult to see any immediate recovery.

Technical Analysis: Could Dogecoin Rebound?

While Dogecoin is currently in a slump, technical indicators suggest that a recovery is still possible. DOGE remains above key support levels, including the 38.2% Fibonacci retracement level and both the 50-day and 100-day moving averages. These levels suggest that DOGE may find stability before attempting to recover further.

Dogecoin price action is very similar to one year ago. In November 2023, $DOGE traded up, then dropped and consolidated before a major move up in 2024. In November 2024, Doge traded up higher, then dropped and is now consolidating. Next is a major move up in 2025. pic.twitter.com/QvMPxh7Bbw

— KrissPax (@krisspax) January 8, 2025

The Percentage Price Oscillator (PPO) indicator, which tracks price momentum, has turned bullish, with its histogram remaining above the zero line. This is a sign that there could still be potential for a reversal. Additionally, some analysts note that Dogecoin’s price action is following patterns seen earlier in 2023 and 2024. In both years, DOGE experienced a similar price pullback followed by a recovery, which raises hope for a potential bounce back this quarter.

Possible Scenarios for Dogecoin’s Price

Looking ahead, there are two primary scenarios for Dogecoin’s price in the coming weeks:

1. Bullish Scenario: DOGE could continue its recovery, eventually targeting a return to its December 2024 high of $0.4830. This would represent a 43.5% increase from its current level and would be a strong signal for the broader market.
2. Bearish Scenario: On the other hand, the decline could continue, with the next key support level lying around $0.2630, which was the December 20 low. A drop to this level would represent a further 20% decline, which would set back any hopes for a quick recovery.