During April, there was a substantial surge in Dogecoin’s open interest, reaching a yearly peak of $12 billion, which has since dropped significantly up until October. Despite a brief uptick earlier this month, the open interest is now approaching its lowest point since November 10th.
This decrease is closely linked to Dogecoin’s recent 20% price decline over the past week, prompting concerns about the short-term future of Dogecoin. What implications does this recent shift in market sentiment hold for DOGE’s trajectory?
Significant Plummet in Dogecoin’s Open Interest
Dogecoin’s open interest has drastically fallen to $1.42 billion, marking a noteworthy difference from its peak of $12 billion in April. The continuous decline in open interest, especially as DOGE’s price dipped to $0.32, indicates traders liquidating positions amidst dwindling positivity.
This decrease in open interest often signifies a lack of belief in an imminent price recovery.
Alongside the recent 20% drop in DOGE’s price, the diminishing open interest suggests that traders are exercising caution with regards to entering new positions, indicating a likelihood of further correction unless there’s a reversal in market sentiment.
MDIA Data Reflects Stagnation and Prudence
MDIA data suggests that Dogecoin holders are increasingly choosing to retain their assets rather than engage in active trading.
The MDIA, which measures the average age of coins on a blockchain weighted by purchase price, has consistently risen to 335 days. This pattern indicates that long-term holders are not actively participating in trading or reassigning their assets, hinting at a stagnant market state.
Historically, an ascending MDIA has been linked with reduced liquidity and weaker demand, typically construed as a bearish indicator.
If this upward trend continues, it underscores a lack of fresh investment or speculative activity within the DOGE market, aligning with recent price slumps. This further supports the prevailing narrative of prudent sentiment dictating Dogecoin’s short-term future.
Struggling to recover critical support levels post recent downturn, Dogecoin faces challenges on the daily chart.
Dipping below the significant $0.35 support level, which previously played a crucial role, Dogecoin’s struggle suggests the prevailing bearish momentum.
The MACD indicator reinforces this negative outlook. Presently, the MACD line resides in negative terrain, indicating downward momentum. The histogram shows diminishing bearish pressure, but until a noticeable bullish crossover emerges, prospects for recovery remain limited.
If the bearish trend persists, there’s a possibility for Dogecoin to test the $0.27 support level soon. Nevertheless, a push by buyers to move the price back above $0.35 and maintain momentum could pave the way for a rebound towards the $0.48 resistance region.
This potential recovery depends on increased trading volume and a resurgence in buying pressure, both of which are currently subdued.