Why Dogecoin Is Sinking Today

Key Points

• Dogecoin is pulling back amid a day of moderate sell-offs for the broader crypto market.

• The meme coin's valuation contraction also appears to have roots in a "buy the rumor, sell the news" dynamic.

• 10 stocks we like better than Dogecoin ›

Dogecoin (CRYPTO: DOGE) is losing ground Monday. The cryptocurrency's price had fallen 4.4% over the past 24 hours of trading as of 5:15 p.m. Over the same period, Bitcoin was down 0.4%, and Ethereum was down 2.2%.

Last week, news hit that a Dogecoin exchange traded fund (ETF) would be launched this week, and that helped spur huge gains for the token. With the launch of the fund now on the very near horizon, the token may be pulling back as part of a "buy the rumor, sell the news" dynamic.

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Image source: Getty Images.

Dogecoin pulls back following a recent surge

On the heels of a recent rally, some investors are taking profits. Despite today's pullback, Dogecoin has still been the best-performing coin among the top-10 cryptocurrencies by market cap over the last seven days. The meme coin is up 11.5% across the stretch.

The token has seen huge gains in conjunction with news of an upcoming ETF centered around the token and news that large buyers are purchasing the token as part of crypto-treasury strategies.

What's next for Dogecoin?

The REX-Osprey Dogecoin ETF was approved by the Securities and Exchange Commission on Sept. 11 and is expected to launch on Sept. 17. The ETF will trade under the DOJE ticker.

In addition to this positive catalyst, there was recent news that some companies have been buying up the token as part of cryptocurrency treasury strategies. While Dogecoin continues to be a very risky investment, there are some signs that it is seeing significant increases in institutional support.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.