Dogecoin has been gradually trading lower since the end of June but it made a sudden spike higher recently. Could this be a sign of a trend reversal or is the longer-term selloff set to carry on?
The 4-hour chart of DOGEBTC from Trading View shows that the pair made a brief pop higher from its ongoing trend lower then proceeded to consolidate. Stochastic is moving out of the oversold area, suggesting a potential return in buying momentum and an uptrend for dogecoin, while RSI is on middle ground and barely offering any clear clues at the moment.
Analyzing this in tandem with BTCUSD price action in the past few days suggests that these trends and sudden moves were mostly just a result of bitcoin volatility. The cryptocurrency has been gaining ground in the past few weeks due to the negative developments in the Greek debt crisis before selling off when the parliament approved the new round of austerity measures.
Since then, dogecoin has formed higher lows against bitcoin, indicating a potential reversal from the previous trend. More positive updates from Greece could reduce fears of capital controls and an exit from the euro zone, which could convince Greeks to liquidate their prior bitcoin holdings. In addition, banks have already reopened in the country, lowering the need for its citizens to pursue alternative ways of moving funds around.
Dogecoin could take advantage of the potential bitcoin selloff to spur a rally for DOGEBTC off its current levels. Debt issues in Greece have faded, reducing the need to move funds towards bitcoin and other alternative currencies.