Dogecoin suffered a terrible blow on Tuesday, as its price plunged in the high single digits along with Bitcoin and Ethereum.
According to CoinDesk’s real-time figures, the cryptocurrency meme fell 9.7% at one point on Tuesday, and the price of Dogecoin fell 7.04% later in the day to trade at $0.174921. Meanwhile, the price of Ethereum is down 8.3% on the day before it is currently down 6.01% to $3805.71.
On the other hand, bitcoin sank as much as 8.1 percent sometime on Tuesday before dropping 6.06 percent to $4,7692.56, based on ongoing price monitoring.
Dogecoin price crash today due to slow holiday trading
Experts point to a traditional slow trading week heading towards the end of the year as the reason for the free fall, Motley Foll reported. As such, the entire crypto space has shed a significant portion of its value, with the global market cap dropping three percent to $2.3 trillion as none of the tokens were rescued. The holidays from Christmas to New Year’s Day have been a slow trading period, which may explain the drop due to cryptocurrency volatility.
Also Read: Dogecoin Price Prediction: Could It Become People’s “Currency” After Ethereum Co-Founder Helps?
The crash can also be attributed to investors’ quick selling just to liquidate their positions, The Motley Fool reported. In this case, when the broker or exchange encounters that the investor with a leveraged position is facing losses, liquidation is obligatory to prevent further losses.
As many as $374 million in long cryptocurrency positions have been liquidated as of Monday. This is the highest liquidation level since December 2 and 3 when it reached $636 million and $1.58 billion, respectively.
As a result, cryptocurrencies were not part of that year-end rally that lifted traditional assets like stocks.
Crypto Investors See Fed Inflation Move to Drive Selling
The drop could also be the result of increased downward pressure on cryptocurrencies that are an inflation hedge, as the US Federal Reserve considered reducing bond purchases in 2022 and raising interest rates. Inflation has been a major problem among many crypto investors, and with the federal measures, bitcoin owners will be forced to sell their assets.
But despite this, there is no need to worry about the current crash, as there is no such main reason for it as cryptocurrency scams. Tokens for fluctuating behavior should be used in every experience every now and then, and Tuesday is no exception.
The leverage in the cryptocurrency market is worth keeping an eye on for long-term investors, due to how trading gains or losses are intensified. Investors are now using leverage and futures contracts to buy Bitcoin and other cryptocurrencies, a move seen as causing more volatility in the market.
However, the Benzinga report stated that Dogecoin is starting to gain a “bullish outlook” especially by early next year, given that it will bounce off the support levels at $0.15. Momentum is also emerging when people head to work again after the holidays and cryptocurrency trading is expected to accelerate.
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