In April, Dogecoin [DOGE] open interest briefly climbed to an annual high of $12 billion, but by October, it experienced a significant decline. Despite a brief recovery at the beginning of the month, open interest is now approaching its lowest level since November 10.
This downward trend coincides with Dogecoin's 20% price drop over the past week, raising market concerns about its short-term trajectory. What impact will the recent shift in market sentiment have on Dogecoin's future?
Notably, Dogecoin's open interest has significantly dropped to $1.42 billion, contrasting sharply with the April high of $12 billion. Especially during the period when Dogecoin's price fell to $0.32, the continued decrease in open interest shows that traders are opting to close positions amid waning optimistic expectations.
This bearish trend in OI usually indicates that confidence in a short-term price recovery is waning.
Additionally, with DOGE's price falling 20% in the past week, the reduction in OI indicates that traders are cautious about opening new positions, and unless market sentiment reverses, further retracement may occur.
MDIA signals indicate that market sentiment is stagnant and cautious.
MDIA indicates that Dogecoin holders are increasingly choosing to hold rather than trade their assets.
MDIA tracks the average age of coins on the blockchain weighted by purchase price, and this index has steadily risen to 335 days. This trend suggests that long-term holders are not actively trading or reallocating assets, indicating a stagnation in the market.
Historically, a rise in MDIA is associated with reduced liquidity and declining demand, which is generally seen as a bearish signal.
If this upward trend continues, it indicates a lack of new capital or speculative activity in the Dogecoin market, which aligns with the recent price decline. This supports the notion that cautious sentiment dominates Dogecoin's short-term outlook.
Due to the dominant bearish momentum, Dogecoin struggles below key support levels.
On the daily chart, Dogecoin is struggling to recover the key support level after a recent decline.
The price has dropped below the $0.35 threshold, a level that was previously an important support level, indicating that bearish momentum continues to dominate.
The MACD indicator further confirms the current bearish trend. As of the current report, the MACD line is in the negative territory, clearly indicating downward momentum. Although the histogram shows that bearish pressure has eased somewhat, any hope for a recovery is rather bleak until a clear bullish crossover signal is observed.
If the current bearish trend continues, Dogecoin may reach the support level of $0.27 in the short term. However, if buyers can successfully push the price above $0.35 and maintain this upward momentum, it may experience a rebound targeting the resistance area at $0.48.
However, it is worth noting that this potential rebound largely depends on an increase in trading volume and the emergence of new buying strength, both of which are currently showing a moderate trend.