Due to a significant decrease in open contracts and failure to hold key support levels, Dogecoin faces stagnation.
The significant decrease in Dogecoin's open contracts reflects a reduction in traders' optimism and market activity.
The recent drop in price to $0.32 has raised concerns about DOGE's short-term recovery prospects.
In April of this year, Dogecoin's (DOGE) open contracts once surged dramatically, reaching an annual peak of $12 billion. However, after entering October, this figure sharply declined. Although there was a brief rebound at the beginning of the month, open contracts are now nearing their lowest level since November 10. This round of decline closely resembles the 20% price drop of Dogecoin over the past week, causing many investors to worry about the short-term outlook for Dogecoin.
So, what is the deeper meaning behind this market volatility? Changes in market sentiment often signal new opportunities and challenges. In the face of the current situation, steadfast supporters of Dogecoin may need to reassess their investment strategies and explore the underlying reasons. Perhaps, this is a time for reflection or an excellent opportunity to adjust investment portfolios.
Dogecoin's open contracts have significantly decreased.
Recently, Dogecoin's open contracts have seen a sharp decline, now down to only $1.42 billion. Surprisingly, this is a stark contrast compared to the $12 billion peak in April! With Dogecoin's price having once dropped to $0.32, this ongoing downward trend reflects traders' pessimistic sentiment.
This bearish trend in OI usually means that market confidence in a short-term price rebound is gradually decreasing.
Additionally, with Dogecoin's (DOGE) price dropping 20% over the past week, the reduction in OI shows that traders are being very cautious when opening new positions. Unless market sentiment changes, further pullbacks may still occur.
The MDIA signal indicates that market sentiment is stagnant and cautious.
The MDIA indicates that Dogecoin holders are increasingly inclined to hold rather than trade their assets.
Recently, the MDIA index has received widespread attention. This index tracks the average holding duration of currencies on the blockchain, weighted by purchase price. Surprisingly, this value has steadily risen to 335 days! This phenomenon reflects a key trend: long-term holders appear not to be actively participating in trading or reallocating assets. In other words, the market is currently in a 'hibernation' state.
Historically, the rise of MDIA is often associated with decreased liquidity and declining demand, generally viewed as a bearish signal.
If this upward trend continues, it would mean that the Dogecoin market lacks new capital injections and speculative activities, aligning with the recent price drop of Dogecoin. This further confirms the prevailing cautious sentiment in Dogecoin's short-term outlook.
Due to the prevailing bearish momentum, Dogecoin struggles below key support levels.
From the daily chart, Dogecoin is attempting to reclaim key support levels after a recent decline.
Its price has already dropped below the $0.35 level, which was previously an important support level, indicating that the bearish trend still dominates.
The MACD indicator further confirms this bearish trend. As of the time of writing, the MACD line is in the negative range, reflecting downward price momentum. The histogram indicates that bearish pressure is gradually weakening; however, before a clear bullish crossover occurs, the hope for Dogecoin's recovery remains slim.
Recently, Dogecoin's price movement has indeed been heart-wrenching. If the current bearish trend continues, we may see Dogecoin testing the $0.27 support level in the short term. However, the market is volatile; if buyers can exert force and push the price above $0.35 while maintaining an upward trend, Dogecoin may welcome a rebound, attempting to challenge the resistance area at $0.48.
This potential recovery trend relies on an increase in trading volume and new buying power, but currently, both aspects are performing rather flat.
Can DOGE stage a rebound like in 2021?
Perhaps due to its close ties with Elon Musk and the rumored role he might play in Donald Trump's administration, Dogecoin's price soared after the U.S. presidential election.
Its price surged significantly from a low point, exceeding 200%, reaching $0.485 on December 8.
However, after such a significant increase, DOGE's price experienced a pullback but still maintained above the $0.4 mark.
But last week, the situation changed dramatically, causing the market to collapse, leading to a sharp price drop. In just a few days, DOGE's price plummeted nearly 40%, falling to $0.26.
Despite such a significant price adjustment sounding concerning, this situation is not uncommon in the cryptocurrency market, especially in the highly volatile meme coin sector.
There have been similar violent fluctuations in the past, which may indeed indicate that DOGE has greater development potential in the future.
Comparing the recent market crash to the bull market cycles of 2017 and 2021, during those periods, the most representative meme coins experienced three-digit surges, followed by pullbacks of 40-60%. By the end of each market cycle, they even achieved four-digit or even five-digit spikes.
Can DOGE soar above $10?
An increase of 5000% or even 12000% sounds truly exhilarating, but we still need to approach such predictions with a more pragmatic attitude.
Looking back to 2017 and 2021, DOGE's price movement was relatively stable; in such cases, achieving such a huge increase theoretically seemed somewhat easier.
If this veteran meme coin starts to rise at similar percentages from now on, its price and market cap will surely skyrocket.
For example, if the increase reaches 5000%, its price would exceed $13, and the market cap would surpass $1.9 trillion, which is higher than the current market cap of Bitcoin.
If DOGE were to replicate the surge of 2021, its price would soar to $31 - $32, with a market cap exceeding $4.5 trillion, larger than Apple's market cap.
Although these figures may sound unrealistic at first, and past history cannot fully predict future price movements, it does not mean that DOGE has reached its peak in this cycle.
Dogecoin is currently still some distance from the historical high set in 2021, and many other assets have successfully broken through their peaks, so DOGE may still have considerable growth potential.
Currently, the market conditions for Dogecoin are quite unstable, and whether it can return to its peak in the future remains uncertain. For fans of this 'meme coin,' it's time to carefully consider their investment strategies! Is it time to make a decisive entry or to wait patiently? It all depends on how you interpret the market signals. The road ahead for Dogecoin has just begun; let's look forward to it together!