As Bitcoin continues to attract significant inflows from institutional investors, Dogecoin’s price is on the move as it increasingly becomes the cryptocurrency of choice for retail investors. Interestingly, Dogecoin’s price performance has also been highly correlated with Bitcoin’s price. As such, Bitcoin recent break above $100,000 The price level has also seen the price of Dogecoin. breaking above the top of an ascending triangle that has limited its price action since November 23rd.
Ascending Triangle Breakout: The Key to Dogecoin’s Next Move
According a technical analysis of Dogecoin price from crypto analyst Rekt Capital broadcast on social media platform
He ascending triangle pattern often indicates a continuation of an uptrend. For Dogecoin, the break above this formation indicates bullish strength, but depends on the asset holding this level as support. This is because Dogecoin price immediately began to retest the upper trendline of this ascending triangle pattern. If the new test is successful, it could act as a launching pad for a sustained rally in the coming weeks and months.
According to Rekt Capital’s projection, the safest price target in such a case is $0.569.
Bitcoin’s Influence on Dogecoin Price Action
Historically, Dogecoin’s price trajectory has mirrored that of Bitcoin during periods of market optimism. According to IntoTheBlockDogecoin has a price correlation of 0.96 with Bitcoin on a scale of 1 at the high end. In comparison, Ethereum, the second largest cryptocurrency, has a price correlation of 0.75 with Bitcoin.
Bitcoin’s recent bullish breakout above $100,000 has rekindled market confidence, encouraging capital inflows into major cryptocurrencies including Dogecoin. Interestingly, the Bitcoin price breakout also caused Dogecoin to rise a bit to $0.4582. Analysts suggest that as Bitcoin consolidates its gains and maintains its bullish trajectory, it provides a favorable environment for Dogecoin and other altcoins to recover even more.
However, the correlation between the two assets means that Dogecoin’s potential breakout to $0.569 remains tied to Bitcoin’s ability to maintain its bullish momentum. If Bitcoin were to falter or face a sharp correction, Dogecoin could also struggle to maintain its bullish momentum.
At the time of writing, Dogecoin price is trading at $0.4379, which means that the bulls are still trying to convert the resistance trendline of the triangle formation into support. However, the risk of a drop below the price of Dogecoin remains, especially considering the fact that the price of Bitcoin has fallen back below $100,000 in the past few hours.
Featured image created with Dall.E, chart from Tradingview.com
