The recent bullish trend in the cryptocurrency market has led to an increase in the prices of various digital assets. Dogecoin [DOGE] has also experienced a surge in its value, attracting both retail investors and significant institutional players.
Confidence Displayed by Dogecoin Whales
During the past week, Dogecoin has performed remarkably well, witnessing a substantial 88% spike in its value. This surge propelled the memecoin above the $0.42 threshold briefly before a minor correction occurred when it touched the $0.43 level.
As the price of DOGE began to retreat, whales took advantage of the situation to accumulate more of the memecoin. Notably, a prominent crypto analyst named Ali highlighted this scenario on Twitter.
Reports indicated that within the last 24 hours, DOGE whales purchased 140 million DOGE tokens, equivalent to around $56 million. This significant accumulation underscores the whales’ strong confidence in Dogecoin.
Furthermore, the increase in whale accumulation coincided with a rise in the number of large DOGE holders. Data from IntoTheBlock revealed a notable surge of over 140% in the number of addresses holding DOGE valued between $10k-$100k and a 199% increase in holdings between $100k-$1M. Additionally, addresses with holdings exceeding $10M rose by 155% in the past month.
Potential Challenges Ahead
Although the recent spike in whale accumulation helped Dogecoin revert to a positive daily chart, this influx from major players may not suffice to sustain DOGE’s upward trajectory.
The trading volume of DOGE has experienced a significant decline in recent days. Typically, a drop in trading volume indicates an increased likelihood of a reversal in the current price trend.
Interestingly, despite the recent price surge, Dogecoin’s MVRV ratio saw a decrease. At present, the ratio stands at 27.9%. A declining MVRV ratio suggests that short-term holders stand to profit while long-term holders are likely to incur losses.
Moreover, data from Coinglass highlighted a troubling statistic. The long/short ratio for Dogecoin witnessed a decline in the past few hours, indicating a higher number of short positions compared to long positions, hinting at a potential price decline. If a trend reversal occurs, DOGE could see a minor correction towards the $0.371 mark.
However, if the price surge continues, Dogecoin may retest the $0.42 resistance level. A breakout above this resistance could trigger a significant double-digit price rally, as previously discussed by CryptoCrypto.