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Dogecoin saw a notable drop in value of 4.5% following the announcement that Platform X leader Elon Musk is to testify once again in a regulatory investigation into its acquisition of Twitter . This development casts a shadow of uncertainty over Dogecoin, a cryptocurrency often influenced by Musk's influence on social media.
Dogecoin was rejected at the 50-day exponential moving average, indicating a resistance level that bulls struggled to overcome. This level currently constitutes a ceiling for any potential upward movement. Meanwhile, trading volume showed a downward trend, suggesting a decline in interest or a consolidation phase, which could lead to further price movements.
Technical analysis indicates that the 200-day EMA is the next crucial support level for Dogecoin. If the price falls to this level, there could be strong buying interest which could potentially stop the decline and stabilize the price.
The heart of investors' concerns lies in the potential legal implications of Musk's testimony. If Dogecoin is classified as a security during the proceedings, it could face strict regulations that could hamper its market performance and investor confidence.
If Dogecoin manages to maintain its position above the 200-day EMA and deflect the negative sentiment stemming from Musk's legal situation, it could potentially experience a rebound. However, a bearish scenario could occur if the asset fails to hold the 200-day EMA support, which could result in a further decline towards lower support levels around $0.065.
The situation highlights the impact that regulatory scrutiny can have on crypto assets, particularly those like Dogecoin, which have risen to prominence in part thanks to celebrity endorsements.