Why is Dogecoin down today?

Dogecoin (DOGE) has undergone a minor correction following its impressive 48% rally earlier in October. As of October 23, memecoin is down more than 9.5% from the high of $0.149 established two days ago.

This includes a 6.5% decline in the last 24 hours, which has pushed the price of DOGE down to $0.135, the lowest in a week. The pullback appears to be profit-driven, with rising risk appetite among investors adding to the selling pressure.

DOGE will fall after turning “overbought”.

DOGE's price decline began after the daily Relative Strength Index (RSI) reading crossed above 70, a threshold that typically indicates an “overbought” situation and precedes a correction or consolidation period.

In other words, traders assume that the price has reached a high in the short term and start making profits. DOGE's response to an overbought RSI is consistent with previous occasions when the RSI crossed above 70, leading to significant price corrections.

For example, DOGE price dropped by 23.50% after the daily RSI entered the overbought zone at the end of September.

The Golden Cross section will affect the price of Dogecoin.

Dogecoin's continued price decline coincides with the prospect of a golden cross forming at the key Exponential Averages (EMA), an event that has coincided with major price declines in recent months.

A golden cross occurs when an asset's short-term moving average crosses above its long-term moving average, indicating the possibility of a continued uptrend, typically seen as a bullish signal.

However, in the case of Dogecoin, golden crosses did not immediately lead to purchases. Instead, anticipation of a crossover often triggers buying activity, creating overbought conditions.

This appears to be playing out again as gold's 50-200 EMA cross formations in November 2023 and December 2022 were followed by declines of 18.5% and 13.8% respectively.

As of October 23, DOGE's 50-day EMA is approaching the intersection with the 200-day EMA, following a 48% rise earlier this month. However, as the golden cross approaches, early buyers are locking in profits and contributing to further returns.

If the sell-off continues, DOGE's November downside target will likely be the moving average, currently around $0.111.

The rise of the United States brings the appetite for memecoins

Dogecoin's continued price decline is linked to a rise in US Treasury yields, which could ease recessionary fears and the Federal Reserve may slow the pace of interest rate cuts in the coming months.

RELATED: Bitcoin ETF $79M Outflow Ends 2-Week Bull Run ‘Toward' BTC Price

On October 23, the two-year Treasury yield rose more than 4%, the highest level in two months, while the 10-year yield hit 4.24%, a three-month high.

Rising yields typically reflect improved economic conditions, which can reduce investor appetite for “risky” assets, including Dogecoin. As a result, DOGE faces downward pressure as the probability of holding safe and yielding assets increases in the short term.

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.