Dogecoin experienced a rebound on Friday, with its price returning above 0.40 USD, ending a week-long period of consolidation.
With Gary Gensler confirming his impending departure, traders quickly set up leveraged long positions worth 355 million USD, pushing DOGE's price 3% above the volume-weighted average price (VWAP), suggesting a potential new breakout is brewing.
Previously, Dogecoin's price had dropped 13% from last week's highs, but it broke through 0.40 USD again on Friday. Data from the derivatives market indicates that this surge is directly linked to the news of Gensler's departure.
The market reacted quickly to Gensler's departure, with Dogecoin re-establishing itself above the 0.40 USD mark
Notably, Elon Musk recently participated in the government efficiency department (DOGE) plan proposed by the Trump administration, which also contributed to Dogecoin reaching a three-year high on November 12.
However, traders later took profits, leading DOGE into a 10-day consolidation period.
From the chart, DOGE's price rose 185% between November 5 and November 12, then fell 13% over the next ten days.
As of November 21, DOGE opened at 0.38 USD, down 13% from the three-year high of 0.44 USD announced by Trump on November 12.
However, on Thursday news broke that U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler will resign on January 20.
This news has sparked a positive reaction in the cryptocurrency community, with many believing it signals the potential end of strict investigations and lawsuits targeting multiple crypto companies and prominent figures.
Within 24 hours of this news being released, the global cryptocurrency market briefly surpassed 3.25 trillion USD, reaching a historic high, with mainstream coins including Dogecoin, XRP, and Cardano recording double-digit gains. By the time this article was written on November 22, DOGE had surpassed 0.42 USD, achieving a 13% increase in the past 24 hours.
With market sentiment improving, bulls have also started to increase their long positions, seizing opportunities.
In particular, Dogecoin broke through the critical resistance level of 0.40 USD on Friday, with bullish investors gaining an advantage in the derivatives market. The leveraged trading volume of Dogecoin futures contracts significantly surpassed that of short sellers, which typically indicates that prices may rise sharply.
The Coinglass liquidation chart below shows the real-time balance of long and short leveraged contracts around the current ADA price.
On Friday, Dogecoin (DOGE) long leveraged positions reached 355.5 million USD, while short contracts were at 162.6 million USD. Long positions exceeded shorts by approximately 192.9 million USD, an increase of 118.7%. This indicates that bulls have a clear dominance in the derivatives market.
When long leveraged positions significantly exceed shorts, two key bullish signals usually emerge:
Increased market confidence: As long positions grow, traders' optimism about Dogecoin's short-term price trajectory strengthens. If bulls support their leveraged positions through substantial spot purchases, it may drive prices higher, resulting in more pronounced upward volatility.
Potential Short Squeeze: When short positions are pressured by bullish forces, rising prices may force shorts to cover their positions, leading them to buy back Dogecoin. This 'short squeeze' effect could further drive up Dogecoin's price, especially in the coming days.
Dogecoin Price Prediction: Breaking 0.45 USD Could Trigger Larger Gains
If Dogecoin can maintain the current bullish leverage imbalance and stay above key support levels, the price is expected to move towards the higher resistance level of 0.45 USD.
To confirm this bullish prediction, the expansion of the Bollinger Bands indicates that both trading volume and volatility have increased, further supporting the possibility of retesting 0.45 USD.
Additionally, DOGE's price is currently above its volume-weighted average price (VWAP) of 0.40 USD. If DOGE can firmly close above this key support level amid ongoing speculative pressure in the market, the likelihood of breaking 0.45 USD also significantly increases.
Nevertheless, traders must remain cautious, as excessive leverage could lead to significant pullbacks if the market reverses.
In this scenario, if bulls fail to hold the 0.40 USD support level, a rapid long liquidation could trigger a price drop, potentially targeting around 0.31 USD near the 20-day simple moving average (SMA).
