Dogecoin Drops 25 Percent Amid Middle East Crisis and Fed Tightening

Dogecoin, the leading memecoin secured by the proof-of-work consensus mechanism, has experienced a significant decline in value over the past few weeks. The ongoing Middle East crisis, coupled with the Federal Reserve's quantitative tightening, has cast a shadow over the crypto bullish outlook, contributing to the bearish sentiment in the altcoin market.

Dogecoin's price has plummeted by over 25 percent in the past four weeks, trading at approximately $0.167 at the time of writing. This decline mirrors the broader altcoin market's performance, which has also been on a downward trajectory year-to-date. The total crypto market cap dropped by 2.4 percent in the past 24 hours, hovering around $3.34 trillion during the mid-North American session on Wednesday, June 18.

Despite the current bearish sentiment, there are several key fundamentals that could impact Dogecoin's price in the midterm. Institutional investors have shown increased interest in the Dogecoin network, with several fund managers in the United States seeking to offer spot Dogecoin ETFs. According to Polymarket traders, there is a 67 percent chance that the U.S. Securities and Exchange Commission will approve spot Doge ETFs before the end of 2025. This anticipated approval is expected to trigger bullish speculation and potentially drive up the price of Dogecoin.

In the short term, Dogecoin's price has been forming a bullish trend characterized by higher highs and higher lows since early 2024. However, the memecoin has been trapped in a falling trend year-to-date. In the weekly timeframe, the DOGE price has been aiming to retest the rising logarithmic trend established in the past year. Following the recent rejection of around 25 cents, DOGE price faces a potential 30 percent drop towards the support level of around 11 cents.

The short-term bearish sentiment is supported by the weekly MACD line, which recently crossed below the signal line on the lower side amid rising bearish histograms. However, this bearish sentiment for DOGE price will be invalidated if the altcoin consistently closes above the established falling logarithmic trend year-to-date.