Dogecoin, Shiba Inu face profit-taking risk as Bitcoin's rally takes a breather

Dogecoin and Shiba Inu Face Profit-Taking Risks Amid Bitcoin’s Pause

Dogecoin and Shiba Inu are encountering renewed selling pressure as investors engage in profit-taking across the meme coin sector, following a temporary halt in Bitcoin’s recent record-breaking rally. On Tuesday, Dogecoin (DOGE) fell below the $0.20 mark, trading near $0.1912 after a 3% decline over the day. Shiba Inu (SHIB) similarly retreated from Monday’s peak of $0.00001416, now facing the possibility of testing support around its 50-day Exponential Moving Average (EMA).

Market Volatility and Inflation Data Awaited

The broader cryptocurrency market is experiencing heightened volatility as investors await the release of the United States Consumer Price Index (CPI) data for June. The CPI, a critical measure of inflation, is anticipated to show a 2.7% annual increase, with the core CPI expected at 3%. These projections follow May’s 2.4% CPI rise, which came in slightly below market expectations. The forthcoming CPI report is poised to significantly influence risk sentiment: a favorable reading could bolster further gains in risk assets such as Bitcoin, Dogecoin, and Shiba Inu, whereas a higher-than-expected figure may dampen investor confidence and prompt additional profit-taking.

Bitcoin’s recent surge to an all-time high of $123,218 on Monday has been a key driver behind the rally in meme coins and other cryptocurrencies. However, this rally has also pushed market leverage to its highest level in a year, indicating elevated risk appetite and a prevailing sense of ‘greed’ among investors. This environment, coupled with substantial unrealized profits at current Bitcoin price levels, increases the likelihood of intensified sell-side pressure across the market.

Technical Indicators Signal Caution for Meme Coins

Technical analysis of Dogecoin reveals growing bearish signals. The 200-day EMA is acting as resistance at $0.2025, while the 100-day EMA near $0.1900 provides initial support. Should selling continue, the 50-day EMA at $0.1819 may become a critical support level. The Relative Strength Index (RSI) has declined to 57, indicating weakening buying momentum. Data from blockchain analytics firm Glassnode shows that Dogecoin’s supply in profit has expanded to approximately 104.5 billion DOGE, heightening the probability that holders will liquidate positions to secure gains.

Shiba Inu is facing similar vulnerabilities, with short-term risk aversion among retail investors contributing to its price pullback. The meme coin sector is not isolated in this volatility; Ethereum has experienced panic selling from smaller investors, and XRP’s trading volume has dropped by 54%. Despite these short-term fluctuations, XRP is forecasted to undergo a significant price surge in 2025, a development that could overshadow near-term movements in Dogecoin and Shiba Inu.

As the market awaits critical inflation data, the potential for further profit-taking remains elevated. Investors are closely monitoring for signals that could either reignite bullish momentum or deepen the ongoing correction across leading cryptocurrencies.