Dogecoin (DOGE) trading volume has fallen to its lowest level since November, indicating a significant decline in market participation on both spot and derivatives exchanges.
This decline coincides with DOGE’s failure to rise above $0.48 since December 8. If this trend continues, the meme coin’s 300% year-to-date (YTD) gains could face further downside pressure.
Declining interest in Dogecoin trading
In October, Dogecoin was worth $0.10. By the first week of December, it had risen to $0.48, with many analysts suggesting that the cryptocurrency could be worth even more. The price surge could be linked to the election of Donald Trump as US president and the return of retail investors.
A few weeks after Trump’s election, Dogecoin’s trading volume surged to $5.69 billion, reflecting the significant interest in cryptocurrency trading. However, as of this writing, Santiment data shows that volume has fallen to $415.31 million.
This is the lowest it has been since November 4. High volume is usually a bullish signal. Therefore, the recent decline, if sustained, suggests that DOGE could face another price decline in the short term.
Another indicator that points to further decline in DOGE is Weighted Sentiment. Weighted Sentiment measures the broader market’s perception of the cryptocurrency using comments posted on social media platforms.
A positive reading on the indicator reflects a bullish sentiment in the overall market, while a negative reading indicates broad pessimism, which is usually bearish. Currently, the indicator stands at -0.57, indicating an increase in bearish comments.
If this sentiment persists, Dogecoin may struggle to attract increased demand. As a result, the price may face downward pressure, which could lead to a drop below the $0.48 mark.
Dogecoin sentiment turns bearish
DOGE Price Prediction: Lower Lows Coming
Dogecoin continues to trade on the 4-hour chart under a descending triangle. A descending triangle is a bearish chart pattern characterized by a downward-sloping upper trendline and a flatter horizontal lower trendline.
This pattern usually indicates a continuation of the bearish price movement, as sellers continually push the price down while buyers struggle to maintain support at the horizontal trend line.
With the price of DOGE below the lower support line, it suggests that bulls may not be able to push the value of the meme coin higher in the short term. Instead, the value of the cryptocurrency may drop below $0.36.
However, if the sentiment around the currency turns bullish and volume increases, this may not be the case. In this scenario, DOGE could rise to $0.45.