Dilemma Faced by Dogecoin Investors Amid Discussions about Potential Pullback
Over the past couple of weeks, Dogecoin [DOGE] has experienced a significant uptrend, marking a period of bullish activity unseen in months.
Despite its remarkable performance, the cryptocurrency has entered into an overbought territory, leading to speculations among investors. The question arises: should traders opt to secure short-term gains or hold on for further potential profits?
At the time of writing, Dogecoin was valued at $0.145, showcasing a 41.95% increase from its recent low in October.
The bullish camp of Dogecoin investors has been actively engaging with the market, displaying a strong push against the bearish forces.
Yet, there are indications that the bullish momentum may be losing steam. Anticipated price resistance above the $0.141 mark, based on past trends, is becoming a challenging barrier for the current upsurge in value.
Although the value broke past this resistance level, there have been struggles sustaining the momentum above it in the last three days.
The Relative Strength Index (RSI) of DOGE already signaled overbought conditions, suggesting a potential slowdown in the bullish trend.
Similarly, the Money Flow Index (MFI) displayed a slight decline after reaching overbought levels, indicating that some traders might be considering capitalizing on profits.
Despite encountering resistance, the bullish investors have shown resilience, with a lack of urgency in cashing out on gains.
This scenario implies that most Dogecoin holders are optimistic about future price increases, as the current price of DOGE remains significantly below its year-to-date peak.
Is Dogecoin Paving the Way for Profit-Taking?
Data from IntoTheBlock highlighted that 80% of Dogecoin holders are currently in a profitable position at the prevailing price levels.
With only 16% of holders incurring losses, it is evident that there exists considerable demand near the lower end of the price spectrum.
Significant inflows from major holders surged from 274.5 million DOGE on October 20th to 1.08 billion DOGE on October 21st, indicating a robust bullish sentiment.
In contrast, outflows from major holders also saw a rise from 52.23 million to 392.2 million during the same timeframe, underscoring a substantial increase in selling pressure from the whale investors.
Nonetheless, the higher inflows into major holder accounts have been instrumental in sustaining the recent price gains.
An analysis of the Dogecoin exchange data indicated a peak in outflow volume of 422.56 million DOGE on October 21st, with inflow volumes slightly lagging at $371.71 million DOGE.
On a different note, CryptoCrypto highlighted a surge in exchange inflows on October 18th, surpassing outflows during that session, signaling a potential rise in selling pressure. Nevertheless, exchange outflows have since regained dominance over inflows.