As the recent downturn in the cryptocurrency market shows signs of easing, Dogecoin, the leading memecoin by market capitalization, has been hit the hardest. Last week, Dogecoin experienced a 25% drop, a significant decline compared to Bitcoin and Ethereum. Memecoins like Dogecoin typically face more substantial sell-offs during market downturns.
“When Bitcoin and Ethereum experience a pullback, there are buyers who enter the market due to their confidence in a price rebound as the markets recover,” explained an industry expert. “However, memecoins and small-cap crypto assets lack value buyers. When the market retreats, there is no one poised to step in at a lower price for Dogecoin.”
The recent market pullback has been attributed to the Federal Reserve’s most recent meeting, during which the central bank announced its decision to decrease interest rates for the third time this year. Additionally, the Fed suggested that there would be fewer rate cuts in 2025 than initially anticipated, signaling tighter economic conditions. This development prompted investors to offload risky assets, including cryptocurrencies and specifically memecoins.
Despite the recent decline, the overall crypto market has had a remarkable year, fueled by resurging investor interest following President-elect Donald Trump’s reelection. Trump’s pledge to promote a favorable regulatory environment for the industry, including the establishment of a strategic Bitcoin reserve, has contributed to this positive momentum.
Dogecoin has seen a substantial increase of over 230% this year, partly attributed to tech magnate Elon Musk’s newfound position as one of Trump’s key advisors. Musk was appointed by Trump to lead a new government division focused on streamlining expenditure, known as the Department of Government Efficiency or DOGE, in a clear reference to Musk’s favored cryptocurrency. This move has helped sustain Dogecoin’s relevance in the market.
“As we look ahead to 2025, the overall outlook for the crypto market is extremely positive, leading to expectations of a bullish trend in Bitcoin, Ethereum, and prominent memecoins like Dogecoin,” remarked an industry analyst.
