Will Dogecoin return to its peak moment of late 2020?

Author: Omkar Godbole, CoinDesk; Compiler: Deng Tong, Golden Finance

• DOGE's price action today bears a striking resemblance to its price action at the end of 2020.

• As Dogecoin surged over 1,000% in early 2021, the so-called fractal is worth noting.

A key tenet of Dow Theory is that Asset price trends are self- Repeated, following Mark Twain’s famous quote: “History never repeats itself, but it often does Rhymes." Therefore, traders should always check whether current price action is similar to the past to get an idea of ​​what the future holds.

Dogecoin, the world’s largest memetic cryptocurrency, has recently risen above the widely tracked 50, 100 and 200-week simple moving averages, ending a 20-month deep bear market correction . The 50-week moving average has crossed above the 100-week moving average, signaling a shift in bullish momentum.

Both developments are strikingly similar to the situation at the end of 2020. The so-called fractal is noteworthy as DOGE witnessed an explosive rally in the first five months of 2021.

DOGE's price action today bears a striking resemblance to its price action in early 2021, before the last bull market began. (TradingView)

Doge spent 20 months in the depths of a bear market, with prices between 5 and 15 cents before breaking out of that range late last month.

A similar 20-month bear market correction in the second half of 2019 and 2020 set the stage for a sharp rally in early 2021. At the time, the cryptocurrency surged 3,600% to 37 cents in May 2021.

So if the 2019-20 fractal is a guide, the path of least resistance for DOGE may be on the higher side. A closer look at the chart reveals that DOGE's uptrends are dramatic but rarely last longer than six months. Meanwhile, the subsequent crash and bottoming/consolidation process took nearly three years.

Another similarity between now and 2020 is that policymakers, including the Federal Reserve, are widely expected to Major central banks will cut interest rates in the coming months. Expectations of a new round of liquidity easing bode well for assets further away from the risk curve. Central banks around the world kept interest rates near zero in 2020.

Still, past data is no guarantee of future results, especially for non-serious cryptocurrencies like DOGE and other memecoins. A potential bearish turn in cryptocurrency market leader Bitcoin could individually drag DOGE lower.