Dogecoin Price Faces 66% Drop to $0.06 Amid Trump-Musk Feud, Analysts Warn

The ongoing public dispute between Elon Musk and Donald Trump has created a climate of uncertainty for Dogecoin, leaving it susceptible to significant price corrections.

With the feud between Musk, a prominent supporter of Dogecoin, and Trump intensifying, DOGE has experienced a 7% decline in the past 24 hours. Analysts are cautioning about a potential 66% drop if the prevailing bearish trend persists.

As of June 6, Dogecoin was valued at $0.17, a decrease from its peak of $0.18 earlier in the week. The cryptocurrency has demonstrated consistent bearish movement, with a 14% drop over the past week and a 28% decline over the last three weeks. This price decrease is partly attributed to the escalating public conflict between Musk and Trump, which has contributed to the ongoing market volatility.

The dispute gained momentum on June 5, following Musk’s departure from the Department of Government Efficiency (DOGE), leading to a heated exchange between the two. Trump threatened to terminate Musk’s government subsidies and contracts, to which Musk responded on X (formerly Twitter), accusing Trump of needing his support to secure victory in the 2024 election. Tensions escalated when Musk criticized Trump’s recent spending bill, labeling it the “Big Ugly Bill,” while also supporting calls for Trump’s impeachment.

Musk, who has long been associated with the rise of Dogecoin, has historically influenced the coin's price movements, often through social media endorsements and Tesla's partial acceptance of DOGE for payments. However, as his conflict with Trump intensifies, concerns about reduced support from Musk are weighing on Dogecoin’s price, with analysts forecasting further declines.

Dogecoin’s Price Action: Intensifying Bearish Indicators

The technical outlook for DOGE is a cause for concern, with the cryptocurrency confirming a bear flag pattern on its weekly chart. This pattern typically indicates a continuation of the downward trend, suggesting potential further selling pressure in the near future.

Dogecoin's price fell below the $0.20 level, marking the lower boundary of the flag, and is currently testing a crucial support level around $0.15, which aligns with the 100-week simple moving average. If this support level fails, the next defense lies at $0.14, where the 200-day SMA is currently positioned.

Key support levels to monitor include the April 7 low at $0.13, which could become relevant if selling pressure accelerates. A breach below these levels could trigger a more significant sell-off, potentially pushing Dogecoin towards a technical target of $0.06, representing a 66% drop from its current value.

Market Sentiment and Sell-Off Risks

The broader market has also felt the impact of the Trump-Musk feud. Crypto markets, in general, have been under pressure due to global macroeconomic factors, and this conflict has added a layer of uncertainty. As Musk’s influence over Dogecoin appears to diminish amid his fallout with Trump, investors have become more cautious, leading to decreased speculative interest in the token.

The relative strength index (RSI), which measures the speed and change of price movements, is currently below the midline at 43. This signals increasing bearish momentum and suggests potential for further declines before the coin reaches oversold conditions.

While a technical correction is possible if Dogecoin reaches lower support levels, the RSI’s movement indicates that a deeper sell-off is possible if market sentiment remains negative and trading volumes increase. Furthermore, with Dogecoin trading below its 20-day EMA at $0.20, the price may encounter resistance at this level, complicating any potential upward momentum in the short term.

Dogecoin’s Role in the Broader Context

As a prominent meme coin, Dogecoin has long been subject to intense speculation. Initially created as a lighthearted joke, it has garnered a significant following, particularly due to its association with high-profile figures like Musk, who played a key role in its rise. The coin's trajectory has largely been driven by social media trends and speculative trading, rather than inherent utility, making it vulnerable to market volatility and shifts in public sentiment.

The recent sell-off also reflects broader concerns regarding the speculative nature of meme coins. Despite Dogecoin's popularity, its long-term value proposition remains unclear, and its price movements are often more influenced by market sentiment and influential figures than by any fundamental growth in the blockchain ecosystem.

Musk’s involvement with Dogecoin has presented both advantages and disadvantages. His endorsements and social media activity have significantly boosted Dogecoin’s price, attracting a broad base of retail investors. However, his personal influence has also exposed Dogecoin to the whims of his public persona, making the asset vulnerable to market fluctuations whenever his relationship with political figures like Trump becomes strained.

The recent drop in Dogecoin's price is largely attributed to concerns about reduced support from Musk, especially as his public influence and backing for the coin appear to be in question. The ongoing feud with Trump has amplified these concerns, leaving many investors questioning whether the meme coin can maintain its upward trajectory without Musk's involvement.

Potential for a Recovery or Further Decline

While Dogecoin faces significant challenges, a recovery is possible if market sentiment shifts favorably. If Musk’s relationship with Trump stabilizes, or if new positive catalysts emerge for Dogecoin, the coin could experience a rebound. However, given the current bearish technical indicators and market uncertainty, the risks of further declines to the $0.06 mark are substantial.

Dogecoin’s ability to recover largely depends on broader market sentiment and the re-establishment of positive news surrounding the coin. If Musk continues to support Dogecoin, or if other developments within the cryptocurrency ecosystem offer new growth opportunities, Dogecoin may see renewed interest. Until then, its price movements are likely to remain volatile, driven by both market forces and public sentiment.

The technical indicators suggest a significant downside risk, with potential for a 66% drop to $0.06 if selling pressure intensifies. However, Dogecoin’s journey has never been predictable, and if market sentiment shifts, a recovery remains a possibility.