Crypto Market Review, November 1

As Dogecoin’s rally continues, the famous memecoin aims even higher. Since it is difficult to analyze the volatile meme currency using traditional tools, looking at DOGE from the perspective of a time-tested theory gives us some useful hints.

Elliot’s wave theory of DOGE

According to the theory developed by Ralph Nelson Elliott, markets move in identified, recurring fractal wave patterns. By knowing and identifying these patterns, investors can predict how long an asset will move up and when the rally will end.

This method of analysis can sometimes be useful when other indicators that usually work in the rally market are no longer reliable or do not show any information that will help investors decide their next move.

Since Dogecoin’s rally was as explosive as one would expect from a volatile memecoin, most lagging indicators cannot keep up with the massively rising price, and the only thing left for investors are volume indicators and analytical methods like Elliot’s waves.

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According to the latter, Dogecoin is currently transitioning from the second to the third wave, which should be the biggest price increase for the Doge-themed cryptocurrency in this growth cycle. However, there is a catch.

The wave-like pattern is only considered valid if the second wave in the market is corrective. In the case of DOGE, the asset had no chance of going through at least a short-term correction that would cool the asset and allow it to move forward without being heavily overbought.

Since the third wave is usually considered the strongest in the market, DOGE would need huge inflows from investors to advance in the market. Since it is already overheated with new investments, the chance of invalidation increases exponentially and we may face an unexpected reversal, even in the growth phase.

The crypto market is losing power

The market recovery everyone was calling for may be coming to an end, as volatility on most digital assets has slowly declined, the first sign of a coming reversal.

With volatility slowly evaporating from the market, investors become more conservative and tend to avoid making further inflows. According to volume profiles, we already see that this tendency is slowly covering the markets.

Ethereum has lost more than 50% of the volume it had on October 25, causing a lack of momentum in the market, despite the whale funding. Over the past two days, ETH has lost around 5% of its value, and the current price performance shows that it is not getting the support it needs for the continuation of the rally.

At press time, most assets are showing mild resistance to a price increase of 5-10% in the last 24 hours, with a distinctive volume downtrend that will most likely lead to a correction in the coming days.