As Bitcoin continues to attract large inflows from institutional investors, the price of Dogecoin is in flux as it increasingly becomes the go-to cryptocurrency for retail investors. Interestingly, the price performance of Dogecoin is also largely correlated with the price of Bitcoin. As such, Bitcoin recent breakout above $100,000 the price level also saw the price of Dogecoin break the vertex of an ascending triangle which has capped its price action since November 23.
Ascending Triangle Breakout: The Key to Dogecoin’s Next Move
According to a technical analysis of Dogecoin According to crypto analyst Rekt Capital relayed on social media platform
THE ascending triangle pattern often indicates the continuation of an uptrend. For Dogecoin, the break above this formation signals bullish strength, but it depends on the asset holding this level as support. Indeed, Dogecoin price immediately began to retest the upper trendline of this ascending triangle pattern. If the new test is successful, it could serve as a launching pad for a sustained rally in the weeks and months to come.
According to Rekt Capital’s projection, the safest price target in such a case is $0.569.
Bitcoin’s influence on Dogecoin 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. For comparison, Ethereum, the second largest cryptocurrency, has a price correlation of 0.75 with Bitcoin.
Bitcoin’s recent bullish breakout above $100,000 has revived market confidence, encouraging inflows into major cryptocurrencies, including Dogecoin. Interestingly, the Bitcoin price breakout also propelled Dogecoin into a small rally to $0.4582. Analysts suggest that as Bitcoin consolidates its gains and maintains its upward trajectory, it provides a favorable environment for Dogecoin and other altcoins to rally further.
However, the correlation between the two assets means that Dogecoin’s potential breakout to $0.569 remains linked to Bitcoin’s ability to maintain its bullish momentum. If Bitcoin weakens or faces 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 turn the triangle formation’s resistance trendline into support. However, there is a risk of a breakout below the Dogecoin price, especially as the Bitcoin price has once again fallen below $100,000 over the past few hours.
Featured image created with Dall.E, chart from Tradingview.com
