While Bitcoin continues to attract large inflows from institutional investors, the Dogecoin price is on the move as it increasingly becomes the cryptocurrency of choice for retail investors. Interestingly, Dogecoin’s price performance is also largely correlated with the Bitcoin price. As such, Bitcoin recent break above $100,000 price level has also seen the Dogecoin price breaking above the apex of an ascending triangle which has limited its price action since November 23.
Ascending Triangle Breakout: The Key to Dogecoin’s Next Move
According to a technical analysis of the Dogecoin price relayed by crypto analyst Rekt Capital on social media platform
The ascending triangle pattern often indicates a continuation of a bullish trend. For Dogecoin, the breakout above this formation indicates bullish strength, but it depends on the assets holding this level as support. This is because Dogecoin price has immediately started retesting the upper trendline of this ascending triangle pattern. If the retest is successful, it could act as a springboard 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’s 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 maximum 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 reignited market confidence, driving inflows into major cryptocurrencies including Dogecoin. Interestingly, the Bitcoin price breakout also gave Dogecoin a small rally to $0.4582. Analysts suggest that as Bitcoin consolidates its gains and maintains its bullish trajectory, it provides a favorable environment Dogecoin and other altcoins to collect further.
However, the correlation between the two assets means that Dogecoin’s potential breakout to $0.569 still depends on Bitcoin’s ability to maintain its upward momentum. Should Bitcoin 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 the bulls are still trying to convert the resistance trendline of the triangle formation into support. However, there remains the risk of a break below the Dogecoin price, especially considering that the Bitcoin price has once again fallen below $100,000 in recent hours.
Featured image created with Dall.E, chart from Tradingview.com