Key Insights
Dogecoin whales are offloading large amounts of DOGE, which shows bearish sentiment.
Open interest and network activity have dropped lately, amid weaker demand.
Analysts also expect a strong bounce that could send DOGE above $0.45.
Dogecoin price has entered a very interesting phase that could decide whether it crashes further or recovers soon.
The memecoin, after rallying to a high of $0.28 in late July, has since lost more than 24%. It is now hovering near the $0.22 level, and market data shows both bearish and bullish signs.
One hand shows that the whales are reducing their exposure, open interest is declining, and activity on the network is weakening. Analysts, on the other hand, believe that strong support above $0.20 could open the door to a massive rally that might double DOGE’s value.
Large holders have been selling DOGE during the latest decline. Moreover, wallets holding between $10 million and $100 million worth of Dogecoin have dropped by 6% since late July, according to Santiment.
This includes a major transfer of 900 million DOGE worth over $200 million to Binance, which has caused worries of short-term sell pressure.
Historically, when big investors exit while prices fall, it usually shows a lack of confidence in the asset’s future over the near term. The selling trend indicates that whales are seeing more downside ahead for Dogecoin price.
Dogecoin futures open interest has fallen as well. Data from CoinGlass shows that the memecoin’s OI has dropped to $3.24 billion from a high of $5.35 billion on July 22. This stands as an 8% decline since last Sunday.
Again, historically, lower open interest tends to show less speculative trading. This means that fewer traders are betting on near-term gains.
Data shows that open interest has cooled | Source: Coinglass
Network activity has also cooled. Daily active addresses on the Dogecoin blockchain have plunged to 58,000, which is far below the 674,500 seen in July and the 1.65 million peak in Q4 last year. Fewer active addresses tend to mean that fewer users are transacting on the network.
Technically, however, the current Dogecoin price chart paints a bearish picture. DOGE is retesting the lower support of a rising wedge pattern at $0.218. According to the charts, a rising wedge typically points towards a reversal. It also shows that buyers are losing strength.
If the price breaks below this support, analysts expect a correction to come right after. The wedge’s technical target points to $0.12, which would present a massive 45% drop from current levels.
The Relative Strength Index (RSI) also supports this outlook, after falling to 49 from an overbought level of 85 in late July.
Despite these bearish signals, some analysts are still optimistic about the Dogecoin price. Pseudonymous analyst Setupsfx recently shared on TradingView that $0.20 has acted as a strong support level in recent dips.
Each time bears tried to push DOGE below this line, buyers stepped in to defend it.
This means that if this support continues to hold, DOGE could rebound very quickly. Setupsfx predicted that a breakout could lift the price above $0.45 with a possible run toward $0.50. This would represent a rally of more than 100% from current levels.
Other analysts, like Cas Abbé, indicate that Dogecoin has spent a long time consolidating. The memecoin, after spending time in crab walks, tends to experience massive upside moves. Abbé argues that this cycle may repeat itself, especially since trading volumes have recently boomed during price corrections.
History shows that Dogecoin tends to build strength during quiet phases before a surge. If that pattern continues, the next big breakout could be massive.
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