Could Dogecoin drop to $0.05? Analyst issues shocking 60% crash warning

Technical analysts predict that Dogecoin faces significant downside risk even if Bitcoin experiences a short-term rebound. This warning is being issued because the historical pattern from 2022 appears to be repeating itself in the cryptocurrency market.

The pseudonymous analyst VisionPulsed outlined the bearish scenario in a video posted on YouTube. The core of the prediction is that the price trends of Bitcoin and Dogecoin will diverge, mirroring the situation two years ago before the price crash.

Bitcoin Shows Signs of Potential Reversal

The daily stochastic Relative Strength Index (RSI) for Bitcoin is the basis of this analysis. The indicator is descending from the overbought region toward the oversold region. This movement coincides with the new lows set in October, November, and early December.

The current cycle differs from previous resets. When the indicator enters the oversold state, Bitcoin prices may form higher lows. This price action would mark the first higher low in two months.

VisionPulsed emphasized the significance of this potential shift. If a higher low is confirmed, it would indicate a short- to mid-term trend reversal. Such a scenario could trigger a rally in the cryptocurrency market.

The analyst cautioned against premature optimism. The bullish outlook is entirely dependent on Bitcoin's ability to hold above the recent support level. If it falls below the current level, the reversal theory will be invalidated and the downward trend will continue.

Bitcoin is currently trading within the lower band of the seven- to eight-day Gaussian channel. This cryptocurrency has remained in this region for about four weeks. During the accumulation period in 2022, Bitcoin stayed in a similar region for 63 days before breaking below it.

Dogecoin Divergence Signals Weakness

Dogecoin's technical pattern stands in stark contrast to Bitcoin. While Bitcoin is attempting to stabilize, Dogecoin continues to set new lows on the daily chart. This divergence mirrors what was observed throughout 2022.

During that period, Dogecoin continued to decline while Bitcoin formed a bottom with higher lows. This trend suggests that Dogecoin is on the verge of a severe crash.

VisionPulsed predicts that if Bitcoin rises, Dogecoin may experience a rebound. The analyst believes the resistance level in January is around $0.20. He considers this could be the last opportunity before a deeper correction.

The base scenario forecasts Dogecoin's price to fall to the $0.05 to $0.06 range. This prediction implies a 60% drop from the current price.

At the time of writing, Dogecoin is trading at approximately $0.1259, down 4.74% in the past 24 hours. The analyst noted that Dogecoin shows no bullish signals until it breaks above the established downtrend line. The current technical setup suggests continued weakness.

Dogecoin price chart, source: CoinMarketCap