Why Dogecoin Is Sinking Today

What happened

Dogecoin (DOGE -3.04%) is losing ground in today’s trading. The cryptocurrency’s price was down roughly 3.3% over the previous 24-hour period as of 12:30 p.m. ET Saturday.

There doesn’t seem to be any coin-specific news driving the pullback for Dogecoin, but the vast majority of top-100 tokens have seen significant sell-offs over the last day of trading. Without any fresh, positive catalysts to help it buck crypto-market trends, the popular meme token is participating in the broader pullback. 

So what

Across cryptocurrencies and stocks, investors are taking a more cautious approach to risky plays, and the shift in sentiment continues to affect Dogecoin. With inflation coming in at its highest rate in more than four decades, the Federal Reserve seemingly on track to raise interest rates six more times this year, ongoing uncertainty related to Russia’s invasion of Ukraine, and disappointing earnings results for some high-profile big tech companies, there are a lot of bearish catalysts to consider right now.

Now what

Dogecoin currently has a market capitalization of roughly $17.7 billion and ranks as the 11th largest crypto token by valuation. Momentum for the broader cryptocurrency market is likely to continue playing a major role in shaping DOGE’s token price, but one big story that’s been in the news lately might also influence performance in the near term. 

Tesla CEO Elon Musk appears to be on track to complete a $44 billion acquisition of Twitter, and the influential tech executive has previously indicated that he’d like to see Dogecoin have more integration with the social media platform. More specifically, Musk has said that he thinks Dogecoin should be accepted as payment for the Twitter Blue premium subscription service.

That change alone might not be enough to power significant, sustained gains for the token, but it’s possible that further integrations with Twitter could create catalysts that boost cryptocurrency’s price. Support from Musk has played a key role in boosting Dogecoin’s token price, and many of those holding the token are hoping that he will help power renewed gains. While moves from Musk or another strong bullish phase for the broader crypto market could lift DOGE, it’s worth remembering that the token remans a high-risk investment.