Dogecoin remains below $0.10 despite the rejection model
Key receivers
DOGE is down 0.5% and continues to trade below the $0.10 psychological level.
The coin is strengthening and may go higher in the near future.
Dogecoin (DOGE), the largest meme coin with a capitalization of $14.27 billion, represented more than 0.50% of the $2.49 trillion cryptocurrency market as of Wednesday.
Despite its inflation, Dogecoin has underperformed.
Dogecoin defends the inflation model by stating that as the total supply of DOGE increases, inflation will gradually decrease to 3.1% from 3.6%.
The assumption behind this claim is that demand for MemCoin will remain stable, supported by a strong community using DOGE for staking, institutions launching DOGE-focused exchange-traded funds (ETFs), and growing use in decentralized finance (DeFi) services.
While the narrative suggests stable demand, continued positive pressure on DOGE prices may not be guaranteed.
While Dogecoin's fixed-minus model reduces inflation in terms of increasing supply, it cannot reduce the total supply. Inventing 5 billion DOGE per year could be a risk of continued decline, especially in times of low demand.
Dogecoin's strategy emphasizes practical use as a currency rather than hoarding, and encourages miners to protect the network. However, ongoing supply pressures may limit the long-term effectiveness of this inflation model.
Apart from this, institutional demand for DOgecoin remains muted. There have been only 15 days of outflows since the DOGE Spot ETF launched on November 24, with a total net asset value of $10.80 million. With 79 days of no flow and two days with net flow, institutional interest in DOGE is limited.
The Dogecoin treasury currently holds just over 780.54 million DOGE, which represents 0.51% of the total DOGE supply. Gaining more institutional support is key to Dogecoin's transition into the global financial system and providing the necessary demand to support its inflation model.
DOGE could rally above $0.10 if the bulls regain control.
The 4-hour chart of DOGE/USD is dull and bearish despite the recent rally of the broader crypto market. At press time, DOGE is trading at $0.094 after rejecting a high swing of $0.098 earlier this week.
An RSI of 55 is above the neutral 50, indicating fading bearish momentum. The MACD lines are also above the zero range, adding an additional bullish narrative to the pair.
If the bulls regain control, DOGE could swing above $0.098 for the first time since March 16 and hit the $0.10 psychological level.
However, if the bearish correction continues, DOGE may retest Sunday's low of $0.09012 in the near term.
