Why is Dogecoin price down today?

Dogecoin (DOGE) price is down today as the wider crypto market undergoes a sharp correction.

Notably, on April 27, DOGE’s price dropped 4.82% to around $0.15, underperforming the crypto market, whose valuation fell 2.25% on the same day. The memecoin has plunged by 38% when measured from its local top of $0.229, established a month ago. 

DOGE/USD daily price chart. Source: TradingView

Let’s take a closer look at the most likely reasons behind Dogecoin’s latest pullback.

Declining rate cut prospects hurt Dogecoin demand

Dogecoin’s drop today is part of a broader crypto market downtrend that started after the release of the U.S. gross domestic product (GDP) on April 25.

Notably, the U.S. economy’s growth was 1.6% in the first quarter of 2024, against expectations of 2.5%. At the same time, personal consumption expenditures rose 0.3% in March.

In response to these underwhelming economic indicators, swap traders have scaled back their expectations for Federal Reserve interest rate cuts in 2024 to just 33 basis points, a significant reduction from the more than six quarter-point cuts expected earlier in the year.

Target rate probabilities for December Fed meeting. Source: CME

Expectations of sustained high interest rates pushed the yield on the benchmark U.S. 10-year Treasury note to 4.739% on April 24, its highest level in five months.

US10Y daily performance chart. Source: TradingView

The yield has been hovering around the same level ever since, reducing the appeal of riskier crypto assets. For example, on the day the yield peaked, five spot Bitcoin exchange-traded funds (ETF) experienced outflows totaling $217 million.

Source: X

Declining Dogecoin open interest and funding rates 

Dogecoin open interest (OI) has dropped to $865.63 million on April 27 from its local peak of $2.21 billion from almost a month ago. Meanwhile, the funding rate is now 0.0063% per eight hours. 

Dogecoin OI and funding rate. Source: Coinglass

Together, both the decline in OI and the low funding rate points to a bearish sentiment prevailing in the market. This indicates that traders are either taking a cautious approach due to uncertainty…

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