Dogecoin (DOGE), the leading meme coin by market capitalization, is currently navigating a period of significant price volatility. After a notable 23% retraction from its recent high of $0,2873, Dogecoin is attempting to stabilize around the $0,2219 support level. This price correction has triggered substantial liquidations in the derivatives market, amounting to $53 million within a 24-hour period, with long positions bearing the brunt of the losses.
The current market sentiment for DOGE appears predominantly bearish in the short term, a perspective reinforced by several key on-chain and derivatives metrics. Despite a preceding 84% price surge from its July 1 low of $0,1568, broader interest in Dogecoin has not seen a commensurate increase, raising questions about the sustainability of its recent gains.
Network Engagement Dips Significantly
A critical indicator pointing to Dogecoin’s challenges is the decline in its daily active addresses. This metric, which tracks the number of unique users interacting with the network, shows activity levels significantly below those observed in May and June. For instance, recent data indicates approximately 70.000 addresses engaged with the Dogecoin network, a stark contrast to peaks of 517.000 in June and 675.000 in May. This suppression in network activity suggests a lack of new adoption and demand catalysts, potentially hindering any sustained upward price movement. The disparity between price action and user engagement implies that the recent rally may have been driven by speculative fervor rather than fundamental growth in utility or user base.
Futures Market Shows Fading Confidence
Further dampening the outlook for Dogecoin is the decline in its futures Open Interest (OI). This metric, representing the total notional value of outstanding futures or options contracts, has seen a drop to an average of $4,34 billion from a peak of $5,35 billion earlier in the week. A decrease in Open Interest typically signifies a reduction in market participation and confidence in the asset, indicating that traders might be closing positions or that new capital inflow is slowing. This cooling interest in the derivatives market often translates to a lack of bullish momentum in the spot price, or even contributes to a downward trend.
Technical Signals Point to Caution
From a technical analysis perspective, Dogecoin is flashing short-term sell signals. The Moving Average Convergence Divergence (MACD) indicator on the 4-hour chart initiated a sell signal earlier this week, as the blue MACD line crossed below the red signal line. The presence of red histogram bars beneath the zero line further confirms this bearish momentum.
Key levels to watch include the 100-period Exponential Moving Average (EMA) at $0,2244, which is currently acting as support, and the 50-day EMA at $0,2428, serving as resistance. A definitive move beyond either of these levels could dictate Dogecoin’s immediate price trajectory. While the Relative Strength Index (RSI) has shown a slight rebound from 36 to 40, indicating some nascent bullish sentiment, it remains significantly below overbought territory (78), suggesting that underlying selling pressure could still keep the price closer to the 100-period EMA support or potentially extend the decline towards the next tentative support at $0,2064.
DOGE/USDT 4-hour chart
The confluence of weakening network activity, declining futures interest, and bearish technical indicators suggests that Dogecoin faces considerable headwinds. While a recovery attempt is underway, the prevailing sentiment points towards a cautious outlook for the meme coin in the immediate future.
Disclaimer: This article is for informational purposes only and should not be taken as financial advice. Always conduct thorough research before making investment decisions.
