The collapse of Sam Bankman-Fried-founded cryptocurrency exchange FTX has had a profound impact on digital currencies, with traders now calling it a Lehman-like moment for the space.
What Happened: Meme crypto Dogecoin DOGE/USD was seen rebounding from the past week’s ravages and was among one of the biggest advancers on Saturday.
At last check, Doge was rallying 11.85% to $0.09133, according to Benzinga Pro data. The gain stands out when compared to the biggest cryptos, including Bitcoin BTC/USD and Ethereum ETH/USD, which advanced a more modest 0.46% and 2.75%, respectively.
Ahead of the FTX Saga, Doge staged a strong recovery, as it broke out of a trading range under $0.08. The rally that started in earnest on Oct. 29 took the meme coin to a high of $0.157203 on Nov. 1, up about 87.4% from the Oct. 28 closing price of $0.083897. The strong upside was partly attributed to Tesla CEO Elon Musk’s purchase of Twitter. Musk’s support and his mention of the crypto have propelled DOGE higher on multiple occasions in the past. The prospect of the Fed pausing or slowing its aggressive rate hikes also lent support to the rally.
The upward momentum slowed down subsequently, but a reversal in Dogecoin began on Nov. 8 when the native token of FTX FTT/USD collapsed by 72% on withdrawal requests by clients. This followed Binance CEO Changpeng Zhao stating on Nov. 6 that his firm is liquidating its FTT holdings due to unspecified recent revelations.
From $0.111299 at close on Nov. 7, Doge fell to an intraday low of $0.072109 on Nov. 9 before bouncing off this bottom.
What’s Next: Notwithstanding the small recovery, headlines on the FTX saga will continue to drive sentiment toward cryptocurrencies in general and Doge in particular. Meanwhile, risk appetite has improved following Thursday’s U.S. inflation report, which has set in motion a rally in equity markets. This risk appetite could prove contagious, potentially leading to a catch-up rally in the crypto space when the FTX dust settles.
Doge has critical support around the $0.087 level and further downward, the area around $0.073 is another key support level.
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