Diverging Opinions Among Dogecoin Investors on Profit-Taking – Potential Price Correction Ahead?
The recent bullish trend in Dogecoin [DOGE] has been one of the most notable in months.
Yet, as the cryptocurrency entered overbought territory due to its impressive gains, a debate has emerged among investors. Should profits be cashed in now or is there still more room for growth?
At the time of writing, Dogecoin was trading at $0.145, marking a 41.95% increase from its October low point.
Essentially, Dogecoin enthusiasts have been actively resisting any downward pressure in the market.
But, is a break time looming for the Dogecoin bulls? The historical data indicated that the $0.141 price level might serve as a resistance point.
While the bulls managed to surpass this threshold, they are now facing challenges in sustaining the momentum above it in recent days.
The Relative Strength Index (RSI) for DOGE had already signaled overbought conditions, pointing to a potential slowdown in the bullish trend.
Similarly, the Money Flow Index (MFI) showed a slight decline after hitting overbought levels, hinting at some investors beginning to secure profits.
Despite the mounting resistance, there hasn’t been a significant rush to sell among Dogecoin holders, suggesting confidence in a continued bullish trend. The current price of DOGE remains notably below its year-to-date peak.
Is Profit-Taking on the Horizon for Dogecoin?
An analysis by IntoTheBlock revealed that a vast majority, 80%, of Dogecoin holders were enjoying profits at prevailing price levels.
Only 16% were in a loss position, indicating strong demand at lower price points.
Notably, there was a substantial increase in large holders entering the market, with inflows rising from 274.5 million DOGE on October 20th to 1.08 billion DOGE on October 21st, signaling robust bullish sentiment.
Conversely, outflows from large holders surged from 52.23 million to 392.2 million during the same period, suggesting intensified selling pressure from major investors.
However, despite the elevated sell-offs, the influx of DOGE into large holder wallets was more pronounced, helping to uphold the cryptocurrency’s recent gains.
An overview of the exchange flows of Dogecoin highlighted a peak in outflows at 422.56 million DOGE on October 21st, with inflows slightly lower at 371.71 million DOGE.
Nevertheless, CryptoCrypto observed a spike in inflows exceeding outflows on October 18th, signaling a potential increase in sell-offs. Subsequently, outflows have regained dominance over inflows.