Im just going to quote one post from DOGE reddit community to here:
My opinion is same. Just without meme extras.
TLDR; Dogecoin is one of the most profitable coins to mine, so people are mining and dumping for profit. Will probably still drop by ~10-25%. Woof.
https://i.imgur.com/NRVOtRI.jpgA lot of people are posting about the price of Dogecoin and are concerned with its price. There is speculation that is misleading and not backed up by much theory. It’s not just as simple as supply and demand, panic selling or the line of best fit on a graph. Let’s look at the maths and see why the coin is dropping so rapidly and why now.
MAFFS
The difficulty of mining a block of DOGE currently ranged from 300-400 [1], the higher this goes the less coin you will mine. To make things simple let’s run an example: Assume you have 1000kHash of digging power; with that you could mine at the current difficulty level approx. 30,000 DOGE a day [2]! The value of Dogecoin is tightly tied to Bitcoin, we first convert it to BTC and sell that. The price for a single DOGE is roughly 0.00000040 BTC [3] and a BTC is worth around $850 [4]. In our 24 hours of work we earn $10.20 (0.00000040 * 30000 * 850). Wow. Such pawfit.
Now compare this to the ‘standard’ of scrypt mining, Litecoin. For the same time and strength of your digging you would yield around $8.50. If you were only interested in profit you would mine DOGE and sell it because it made you the most profit for your hashrate. A lot of people are doing this, including multicoin pools, they mine the most profitable coin and convert it to BTC. It’s simply efficient. This means that there is a huge dump of coin on the market and the price will fall.
SPECULATION
When will the coin stop dropping in price? When it is no longer the most profitable coin, so probably around 0.00000030 to 0.00000035 BTC. At this price the profitability is too low to reward these types of miners. Alternatively, if the difficulty was to increase then the amount of coins released would be reduced and the profit margins would also decrease, I’d estimate the difficulty would need to be around 450 to 500 to balance out. The difficulty increases if more people mine the coin, and at this point that will be depending on popularity.
Sure a few people are panic selling but comparatively this is a drop in the ocean and even so it will just help the coin reach its stable price a little faster. Anybody who wants to see the coin succeed is already doing what they need to, they are not concerned with the price, remember to have fun!
Another point to note is that over the last few days the price of BTC has risen, and so even if the price of DOGE was stable the exchange ratio for DOGE->BTC would still show a fall – this is slightly misleading and the fall in price is not as hard as it seems!
So what can you do? Wait. The price will level out and over time the difficulty should increase with popularity and in around 1-2 months the reward will halve, I'd expect a big peak in price around that time. The coin is young and popular; it needs to learn the Earth before it can go to the Moon
