Dogecoin Faces Crucial Support Zone Ahead of Possible Rebound

Dogecoin (DOGE), the largest memecoin by market value, is approaching a crucial support zone tied to significant price gains in previous market cycles. The token's current price of around $0.07 is about 85% below its late-2024 peak near $0.48. According to analysts, Dogecoin will face a test at the $0.048 to $0.063 range, which preceded gains of about 224% and 887% in earlier market cycles.

If buyers defend this support area, a rebound could first target $0.088, followed by resistance near $0.11 to $0.12. However, possible rate increases in Japan and the U.S. could trigger another yen carry-trade unwind, putting pressure on risk assets.

The Bank of Japan held its policy rate at 1% in July, but board member Hajime Takata supported an immediate move to 1.25%. Markets put about 40% odds on a September increase after Japan's two-year government bond yield rose to 1.51%. The Federal Reserve also adds a second risk as traders consider another 25-basis-point move in September.

During the August 2024 unwind, Japan's Nikkei fell nearly 20%, the S&P 500 lost more than 5%, and Bitcoin (BTC) dropped about 15% due to the unwinding of yen-funded trades. The affected leveraged positions were estimated at roughly ¥40 trillion, or $250 billion.