Dogecoin Consolidates The Elon Musk-Fueled Rally, Core Developer Advises Caution: What's Next?

Dogecoin Consolidates The Elon Musk-Fueled Rally, Core Developer Advises Caution: What's Next?

Dogecoin DOGE/USD was trading about 2% lower on Thursday for a second day of consolidation after the crypto soared over 47% higher at one point on Tuesday after Tesla Inc TSLA CEO Elon Musk announced the EV manufacturer would trial accepting Dogecoin as payment for some merchandise.

The cryptocurrency has continued to gain utility this year with multiple retailers making the decision to accept Dogecoin payments in exchange for products and services, which has in turn grown the community of Dogecoin enthusiasts, who refer to themselves as "shibes."

On Monday, a Dogecoin developer, @inevitable360, posted to Twitter what he claims is the first ever NFT minted on the Dogecoin blockchain, at a cost of just 0.01 DOGE. Although the possible future ability to mint NFTs using Dogecoin is in its first stages, the idea excited the community in the r/dogecoindev subreddit.

Dogecoin core developer, Patrick Lodder, responded to questions from the community but advised caution around the idea that minting NFTs over the Dogecoin blockchain would ever become a better solution.

"My concern is that it will be hard to create a platform for it that can operate at a large enough scale," wrote Lodder. He went on to voice worry that the shibes community may use the development of a single Dogecoin-minted NFT “in the name of pumping the price, because that would be misleading."

The Dogecoin Chart: When Dogecoin spiked up toward the 23-cent level on Tuesday, it smashed into heavy resistance at the 50-day simple moving average, a resistance level at the area and an ascending trendline the crypto fell through on Nov. 26. When Dogecoin was unable to break through the level sellers came in and dropped the crypto down about 16% to close the 24-hour session just above 19 cents.

On Wednesday, Dogecoin printed an inside bar pattern in consolidation and on Thursday the crypto was printing a second inside bar pattern. The inside bar pattern leans bullish because Dogecoin was trading up higher before creating the pattern but traders can watch for a break of the inside bar on Thursday to gauge future direction.

The low trading volume on Thursday further indicates a period of consolidation, where there is both a lack of buyers and sellers. By late afternoon Dogecoin’s trading volume was about 250,000 compared to the average 10-day volume of 412,384.

Dogecoin is trading in line with the eight-day exponential moving average (EMA) but below the 21-day EMA, with the eight-day EMA trending below the 21-day, which leans bearish. If Dogecoin is able to jump up and trade above the 21-day for a few sessions it will cause the eight-day to cross above the 21-day, which would give bullish traders more confidence going forward.

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  • Bulls want to see big bullish volume come in and break Dogecoin up from the inside bar pattern and then for momentum to push the crypto up over a resistance zone at $0.196. Above the area, there is further resistance at 21 cents and the 23-cent mark.
  • Bears want to see big bearish volume come in and drop Dogecoin down from the pattern and then for momentum to cause the crypto to make a lower low below the Dec. 13 low-of-day at $0.151. Dogecoin has support at 16 cents and just above the 13-cent level.
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