Dogecoin (DOGE-USD) Investors Reel from a Brutal 40% Crash This Week, Triggered by a $2.2B Liquidation Event Linked to New U.S.-China Tariffs

The price fell to $0.20 before recovering 26%. But even with this slight bounce, concerns remain about what lies ahead for the world's largest meme coin.

Dogecoin (DOGE-USD) investors were left reeling after a brutal 40% crash this week, triggered by a $2.2 billion liquidation event linked to new U.S.-China tariffs. The price fell to $0.20 before recovering 26%. But even with this slight bounce, concerns remain about what lies ahead for the world’s largest meme coin.

But as the dust settles and investors try to make sense of the carnage, some interesting developments are emerging from the sidelines.

Markus Delivers Blunt Reality Check

Billy Markus, Dogecoin's co-creator, responded to investor concerns with no sugarcoating. When asked to explain the crash, Markus stated plainly that “market dynamics are not magic.” He reminded followers on X (formerly Twitter) that he has no control over the coin’s price, reiterating his long-standing detachment from the project. Despite this, Markus remains a figure investors turn to when Dogecoin hits turbulence.

Investors had hoped for some cryptic hints or reassurance from the meme coin's creator, but Markus's blunt response left many feeling disappointed. However, some appreciated his honesty and willingness to dispel any notions of his involvement in the coin's price movements.

Analysts Predict Potential Comeback

While panic swept through smaller investors, analysts hinted that Dogecoin may be entering a familiar cycle. Crypto chartist Trader Tardigrade pointed to a “final capitulation” phase—a pattern that in past years has led to major rallies. Another analyst, Kevin, linked Dogecoin's movements to Bitcoin's price, saying, “If all goes well with BTC, then DOGE should begin its next leg soon.”

The Commodity Channel Index indicates Dogecoin may be oversold, according to Trading View, which some traders see as a buying opportunity. But with the U.S.-China trade war heating up and threatening to derail markets once again, it remains to be seen whether the meme coin can rally back to its former highs.

Elon Musk's Shadow Looms Over Markets

Adding to the drama, Musk's name resurfaced amid reports of his team's access to sensitive U.S. Treasury systems. Critics, including U.S. Senator Ron Wyden, expressed concerns over Musk's growing influence on financial markets, which has long been intertwined with Dogecoin's volatility.

As the meme coin crashed, so did Tesla (TSLA) stock, which dropped 12% following the trade war news. Musk's close association with both assets has led some traders to speculate on a connection between their price movements.

At the time of writing, Dogecoin is sitting at $0.2724.