Over the past month, Dogecoin [DOGE] has observed a 26% surge following heightened interest from retail investors. This upward momentum propelled DOGE to a peak of $0.149, marking a four-month high earlier this week.
Nonetheless, the current trading value for DOGE stands at $0.137 after a slight retracement from its recent highs.
One potential cause for this pullback could be attributed to the growing number of profit-taking actions. The sudden influx of wallets in profit following the recent gains may have triggered this corrective phase for Dogecoin.
Statistics from IntoTheBlock reveal that at present, 78% of DOGE holders, approximately 5 million addresses, are witnessing profits, while 18% are facing losses.
However, an analysis of active addresses based on profitability indicates a notable decrease. The number of these addresses has fallen by 11%, from 10,890 to 8,130, while active wallets in losses have experienced a modest 2% increase.
As profit margins decline for these addresses, traders typically begin capitalizing on gains, potentially influencing Dogecoin’s upward trajectory.
Notably, there has been a considerable uptick in DOGE deposits to exchanges based on inflow data. The influx of 372M coins represents a 38% surge from the previous day.
Should this inflow trend persist, Dogecoin might be heading towards a reversal into a bearish trend.
Whale Behavior in the Dogecoin Market
Whale activity in the Dogecoin market has notably subsided this week. Following a phase of accumulation, large DOGE addresses seem to have retracted their actions amid uncertainties arising from the weakening price rally.
Over the past six days, significant DOGE transactions exceeding $100,000 have dwindled from 17 billion to 9 billion.
This sharp decline in activity illustrates a diminished interest from whales as the rally starts displaying signs of fatigue.
Considering the substantial proportion of Dogecoin’s supply controlled by whales, their reduced involvement could result in decreased volatility, leading to a period of price stabilization.
Potential Liquidation Zone Threatening a Downward Movement for DOGE
An examination of Dogecoin’s liquidation heatmap reveals the presence of a critical liquidation zone beneath the prevailing price level, ranging between $0.135 and $0.136. These zones typically exert downward pressure on prices, potentially dragging them lower.
If Dogecoin continues its descent and reaches this level, further selling pressure could emerge, compelling long traders to offload their holdings to close their positions.