Dogecoin Price Drops After Musk Clarifies US Government’s Position on Doge

Dogecoin has recently faced a series of challenges, including a failed breakout attempt leading to a price decline. This price drop was further exacerbated by a recent comment from Elon Musk, causing many to doubt Dogecoin's future.

However, despite these challenges, this altcoin is showing some signs of recovery, mainly due to long-term holders (LTHs) accumulating more DOGE at the current low prices.

Dogecoin is facing mixed signals

Dogecoin's Network Value to Transaction (NVT) ratio has increased significantly, reaching a three-month high. This indicates that the network's value is disproportionate to the number of transactions, suggesting a potential lack of investor confidence.

Elon Musk's recent comment about DOGE has further fueled discussions around this cryptocurrency. He clarified that the US government has no intention of using Dogecoin in any form, leading to some negative sentiment. This statement has dampened expectations for the coin, although it has not completely undermined its market position.

The macro momentum of Dogecoin shows signs of stability, proven by the recent increase in HODLer Net Position Change. LTHs have actively accumulated DOGE during the recent price drop, indicating strong confidence from these holders.

This accumulation provides a level of support that could help the coin recover and prevent further price decline. The increasing position change suggests that LTHs are confident in Dogecoin's long-term viability despite recent market volatility and Musk's controversial comments.

This continuous accumulation by LTHs could lead to the formation of a price floor for Dogecoin, creating a buffer against further downward pressure. As the market stabilizes and sentiment changes, these holders could become a driving force behind the next price surge.

DOGE price stagnates, but can it recover?

Currently, Dogecoin is trading at $0.163, just below the support level of $0.164. In the past five days, the coin has dropped 16% after failing to break through the resistance level of $0.198. The failure to overcome important resistance levels suggests that DOGE may not experience an immediate price increase without external stimuli.

Under current market conditions, Dogecoin is unlikely to experience a significant price drop in the near future. The coin may regain the $0.164 support and continue to consolidate just below the $0.198 resistance. However, this consolidation may persist until stronger market signals emerge to push the price higher.

The only scenario that would invalidate this neutral price-outlook is if Musk's comments cause further damage to DOGE's price. In that case, the meme coin could drop to $0.147, extending recent losses. A prolonged price decline would signal more negative sentiment in the market and potentially prevent Dogecoin's recovery.