Doge Encounters Significant Liquidations Is a Further Drop on the Horizon
The decline in Bitcoin’s value is exerting a significant impact on the entire cryptocurrency ecosystem. This week, Dogecoin has experienced a drop of 19.66%. Despite attempts to rally, it has been unable to gain traction. Various indicators suggest that another decrease may be on the horizon. Let’s delve into the reasons behind the bearish signals on the charts.
### Bearish Indicators in the Charts
The daily Dogecoin chart reveals the formation of a falling wedge pattern, which typically indicates a potential price decline. Currently, Dogecoin is finding support from a trendline established in January of this year. At the time of writing, the token is trading at $0.11 and is making another effort to rise. However, a closer inspection shows a lack of immediate support from any moving averages, as all daily moving averages are exerting downward pressure on the price.
*Source: TradingView*
The Relative Strength Index (RSI) has dipped to 40 points. Should the trendline fail to hold, the nearest support level is around $0.08, a zone that previously enabled a bounce-back in early July.
Examining the 4-hour chart provides further insights. The 20-period moving average has crossed below all other significant moving averages, and even the 50 MA has fallen below the 100 MA. If the price does not reverse soon, it risks dropping below the 200 MA in the upcoming week. To avoid this scenario, Dogecoin must close above $0.118. However, liquidation data suggests that such a move may not occur in the near future.
*Source: TradingView*
### Significant Dogecoin Liquidations
In the past two days, approximately $360 million worth of Dogecoin trades have been liquidated. According to data from Coinglass, $59.07 million in short positions and $299 million in long positions were wiped out. In the last 24 hours alone, $246.84 million in long positions were liquidated, compared to just $35.16 million in shorts. This disparity highlights a prevailing negative sentiment in the market.
*Source: CoinGlass*
Data from IntoTheBlock indicates that there are 11,430 Dogecoin wallets that collectively bought around $24.95 billion worth of tokens within the price range of $0.0109664 to $0.120035. This could establish a support level at the current price. Over the past week, approximately $16.46 million worth of tokens have exited exchanges, which is indicative of accumulation. In times of heightened market fear, large holders, or “whales,” often buy up tokens and transfer them to self-custody, which is a positive sign amid the prevailing market anxiety.
*Source: CoinGlass*
The in/out data reveals that 74% of active Dogecoin wallets are profitable at the current price, while 25% are still in the red. This situation could lead to further selling pressure, as profit-holders may choose to sell during market drops in hopes of repurchasing at lower prices.
### What the Data Suggests for Dogecoin’s Future
An analysis of the charts and liquidation data paints a clear picture of bearish sentiment that may herald further declines. However, there are still some encouraging signs that could support a price recovery. If the market rebounds and buying pressure increases, Dogecoin’s price is likely to rise. The $0.11 price level is critical; falling below this threshold could push the token down to $0.08, complicating recovery efforts in the weeks ahead.
**Also Read:**
Bitcoin Price Crashes 10%—Experts Predict Further Decline to $57K
**Tags:**
Crypto news, Price Analysis