At the beginning of Q1 2024, Dogecoin witnessed a strong performance, but it has subsequently relinquished most of its gains for the year so far. Surprisingly, despite this year being favorable for meme coins, Dogecoin has struggled to maintain its momentum. Recent data suggests a resurgence in social sentiment favoring the leading memecoin in the market.
Social engagement surrounding Dogecoin has been steadily increasing, as reported by LunarCrush. The analysis indicates that its social metrics now rival those of major cryptocurrencies like Bitcoin, Ethereum, and Solana. This surge in social activity could signify a concerted effort by DOGE enthusiasts to garner more support for the meme-inspired coin.
The recent uptick in Dogecoin’s social metrics comes at an opportune moment, as the cryptocurrency is currently trading at a significant discount from its highs earlier in the year. For instance, its current price of $0.097 marks a substantial 57.25% drop from its peak in 2024. Moreover, Dogecoin has been consolidating within a wedge pattern, which is now approaching a potential breakout point.
The alignment of price levels and the spike in social sentiment suggests that Dogecoin may witness increased liquidity inflows. Nevertheless, while a rally is plausible, there remains a possibility of further downside if market confidence continues to wane.
Evaluating Dogecoin’s Bullish Sentiment and Holdings
An on-chain analysis revealed a notable increase in short positions within the current price range, totaling over 2 million shorts in the past 24 hours as the price dipped from a weekly resistance level around $0.099.
Despite the prevalence of short positions, net long positions remained higher at the same price levels. Notably, the number of net longs peaked at $4.16 million when Dogecoin was trading at $0.099, indicating growing bullish confidence amid recent price fluctuations.
However, the existence of a significant number of short positions suggests the potential for further downward movement in price.
The heavily discounted price of DOGE in recent months is likely to attract more accumulation, as indicated by a surge in ownership activity. Notably, whale accounts held 64.47 billion DOGE (41.49%) on August 5th, with that figure increasing to 65.39 billion (41.73%) a month later.
Similarly, retail traders have been accumulating Dogecoin, with their holdings rising from 58.44 billion DOGE (37.7%) on August 5th to 59.24 billion (37.8%) recently. In contrast, institutional investors reduced their holdings from 32.51 billion coins on August 5th to 32.08 billion DOGE within the same period.
Based on these ownership statistics, it is evident that both Dogecoin whales and retail traders have been accumulating the coin gradually. The evolving social sentiments have the potential to impact the demand for Dogecoin in the coming days and weeks, making it an intriguing asset to watch in the crypto market.