In April, Dogecoin's Open Interest (DOGE) reached its highest level of the year, hitting $12 billion, but has sharply declined from this peak to October. It rose again earlier this month but is now at risk of dropping to its lowest level since November 10.
The decline in Open Interest, commonly referred to as OI, corresponding to DOGE's price action, has decreased by 20% in the past seven days. So, what awaits this cryptocurrency?
Dogecoin Traders Reduce Contact, Cautious Investors
Currently, Dogecoin's Open Interest has fallen to $1.42 billion. OI represents the total number of open contracts—long or short—on the futures or options market at any given time. An increase in OI indicates that new positions are being added, reflecting greater commitment and confidence in the price action of the cryptocurrency. Conversely, a decline in this indicator reflects position closures, showing that traders' confidence has diminished or they have a neutral outlook on the asset. Therefore, the notable decline in DOGE's OI suggests that traders do not expect short-term price movements that could yield good profits.
If this trend continues, along with the price of Dogecoin dropping to $0.32, the value of the cryptocurrency could witness a prolonged adjustment.
Dogecoin Open Interest. Source: Santiment
The Average Age of Investment Coins (MDIA) is another indicator suggesting further bearishness for Dogecoin. As its name suggests, MDIA is the average age of all coins on the blockchain adjusted for purchase price.
When MDIA rises, this suggests that investors are holding the coin in wallets without actively trading. This indicates stagnation and is often seen as a bearish sign. Conversely, a decline in MDIA indicates that previously inactive coins are being moved, implying increased activity or trading. This is often seen as positive, as it may signal new interest and liquidity.
According to Santiment, Dogecoin's 90-day MDIA has increased, indicating that holders are primarily keeping the coin in a stagnant state. If this situation persists, it supports the bearish outlook for this cryptocurrency.
Average Age of Investment Coins Dogecoin. Source: Santiment
DOGE Price Forecast: The Correction Is Not Over
On the daily chart, DOGE continues to lose ground on key support levels. Notably, the coin has fallen below the support area of $0.35 as investors failed to defend this area. The Moving Average Convergence Divergence (MACD) indicator also supports this decline.
MACD measures momentum. When this indicator is positive, momentum is upward. But if it is negative, then this indicator is downward. As observed below, the MACD indicator is in the negative zone. If this remains unchanged, the price of Dogecoin may drop to $0.27.
Daily Dogecoin Analysis. Source: TradingView
Conversely, if investors reclaim the support area of $0.35 and successfully defend it, this trend could change. In that case, DOGE could recover to $0.48.
