The Potential Continuation of Dogecoin’s Bearish Trend
Over the past week, Dogecoin (DOGE) has faced a mixture of market conditions. While its weekly performance remains positive, the daily and monthly data paint a contrasting picture.
With a current trading price of $0.2608, DOGE has witnessed a decline of around 34.2% in the last 24 hours. This recent dip adds to the ongoing struggle of the cryptocurrency to reclaim its previous all-time high of $0.7316, achieved in 2021.
Currently, Dogecoin’s market value lingers approximately 64% below its peak price.
Analyst Ali Martinez has expressed a pessimistic view on DOGE’s prospects in the near future. Mentioning a recent “death cross” involving the MVRV ratio and the 200-day moving average, Martinez hints at potential further declines.
A “death cross” occurs when a short-term moving average crosses below a long-term one, indicating a looming downtrend.
According to Martinez, during the last two instances of this occurrence, Dogecoin’s price plummeted by 26% and 44%, respectively.
The MVRV ratio, which assesses the average profit or loss realized by holders, provides valuable insight into market sentiment.
Based on Ali Martinez’s analysis, DOGE might face additional drops unless significant resistance levels are breached.
Levels to Watch and the Impact of Whale Activity
Besides the death cross, Martinez points out that Dogecoin’s pattern of forming lower highs and lower lows continues unabated. This persistent downtrend suggests that bullish momentum has yet to gain traction.
Furthermore, he notes that whale activity on the DOGE network has plunged by nearly 88% since mid-November.
A decline in whale transactions often indicates diminished interest from major investors, potentially weakening buying support at crucial junctures.
Open Interest related to Dogecoin has also witnessed a downward trajectory. Coinglass data indicates a 3.79% decrease in OI over the last day, with the current valuation standing at $2.45 billion.
Moreover, Open Interest volume has dropped by 5.52% during the same period, now reaching $2.39 billion.
A dwindling Open Interest typically signifies a reduction in active derivative contracts, signaling subdued trading enthusiasm or decreased speculative activity.
This scenario suggests that traders may be hesitant to allocate significant funds to short-term DOGE trades, exacerbating the challenges faced by the cryptocurrency.