The surge in institutional investments in Bitcoin has created ripples across the cryptocurrency market, notably boosting the popularity of Dogecoin among retail investors.
A close correlation has emerged, with Dogecoin’s price movements closely mirroring those of Bitcoin.
After Bitcoin crossed the influential $100,000 threshold, Dogecoin broke free from a constraining ascending triangle pattern that had held it back since the end of November.
Market Analysis and Breakout
According to the technical analysis from crypto specialist Rekt Capital, Dogecoin recently exceeded the upper trendline of this triangular formation on its daily candlestick chart.
This breakout often signals a continuation of bullish trends.
It’s an encouraging sign for Dogecoin, though it’s vital for the cryptocurrency to establish this new level as a support base.
As Dogecoin retests the former trendline of the ascending triangle, a successful validation might pave the way for sustained upward momentum in the upcoming weeks.
Rekt Capital suggests that, should this positive trajectory continue, Dogecoin might realistically target a price of $0.569.
Correlation with Bitcoin
Historically, Dogecoin closely mirrors Bitcoin’s price trends, especially during bullish market phases.
Insights from IntoTheBlock reveal an impressive correlation coefficient of 0.96 between Dogecoin and Bitcoin, contrasting with Ethereum’s 0.75.
The renewed confidence generated by Bitcoin’s recent ascent beyond the $100,000 mark has led to increased investments in various cryptocurrencies, including Dogecoin.
This bullish movement has already propelled Dogecoin’s price up to $0.4582.
Analysts emphasize that if Bitcoin can maintain its upward momentum, it will provide a supportive backdrop for Dogecoin and other altcoins to rally further.
Potential Risks
However, this inherent link means Dogecoin’s potential to reach $0.569 hinges on Bitcoin continuing its upward path.
Should Bitcoin face any hurdles or setbacks, Dogecoin’s bullish momentum could falter as well.
As of now, Dogecoin is trading at $0.4379, with buyers working hard to turn the ascending triangle’s resistance trendline into a support level.
Still, with Bitcoin slipping below the $100,000 mark in recent hours, there’s a chance we could see some downward pressure on Dogecoin as well.
Source: Bitcoinist
