The price of Dogecoin (CRYPTO: DOGE) is sinking in trading on Bitcoin system. The cryptocurrency fell 5,7% from the previous 24-hour period.
With Bitcoin and Ethereum more or less flat compared to the previous trading day and the broader cryptocurrency market looking unusually stable, Dogecoin's sell-off likely stems from investors taking profits after recent gains. The token began to rise earlier in the week and posted even greater gains after Tesla CEO Elon Musk announced that his electric vehicle company would accept DOGE as payment for its goods. Now, the popular cryptocurrency meme seems to be taking a breather.
For the past year, Elon Musk has been the best friend of a Dogecoin owner. The famed executive hinted at, and directly voiced support for the token through messages on Twitter and other channels, and his comments have often fueled staggering gains for meme-fueled cryptocurrency. Even with the recent downturn, Dogecoin is still up around 19% over the past seven days.
After Musk posted a Tweet on Jan.14, announcing Dogecoin could be used to purchase Tesla merchandise, the token's price quickly jumped 25%. While there doesn't appear to be any coin-specific news behind Sunday's drop in cryptocurrency, it's not surprising to see Dogecoin losing some ground in the wake of the recent pop.
Now what will happen to the main meme coin?
Dogecoin is trading around 75% from the high of life it hit last May. Yet, even after recent volatility in the broader cryptocurrency space and the substantial drop in the token price, the cryptocurrency is still up around 1.900% over the past year.
Dogecoin started out as a canine-themed clone of Bitcoin, but the token has continued to deliver truly impressive returns for investors who entered before its massive price spike. The token currently has a market cap of around $ 23,6 billion and ranks as the 11th largest cryptocurrency by rating.
While Ethereum, Solana, and Cardano have underlying blockchain service networks that help shape the performance of their respective cryptocurrencies, pricing factors for Dogecoin are currently limited to coin adoption and speculation. If more businesses start accepting the token as a payment method or multiple trading platforms introduce the option to buy and sell the cryptocurrency, this could help send Dogecoin higher. However, investors should proceed with the understanding that Dogecoin is a high risk investment, and its trade will likely continue to be highly volatile.