Bitcoin’s recent 11.25% drop has shaken the entire crypto market, causing significant declines across the board. Dogecoin, the original memecoin, suffered one of the steepest falls, plunging 32% over the past three days. As of today, Dogecoin is down 20.7% in the last 24 hours alone, creating opportunities for short sellers and long-term investors alike.
Let’s examine what’s driving these moves and what could come next.
DOGE Metrics
According to data from DeFiLlama, Dogecoin’s total value locked (TVL) has dropped sharply by 32.65% in the past three days. On December 17, the TVL was $8.82 million, but it has since fallen to $5.94 million.
Open interest (OI) in Dogecoin has also decreased significantly. On December 9, OI stood at $4.34 billion when DOGE was priced at $0.45. Now, with the price below $0.30, OI has halved to $2.26 billion, signaling reduced activity and confidence among traders.
A Look at the Technicals
Dogecoin is currently trading at $0.28, with its nearest support level at $0.27, backed by the 100-day moving average (MA). It has slipped below the 20-day and 50-day MAs, while the 200-day MA sits lower at $0.17.
The Relative Strength Index (RSI) is at 30.15, indicating that DOGE is in oversold territory. This could attract whales and large investors looking to buy at discounted prices.
Whale Activity In Focus
Coinglass data reveals that Dogecoin remains in a risky zone despite recent attempts at recovery. Whale orders and large trades dominate, with many traders holding substantial short positions.
At the current price, a majority of short trades have been fulfilled. This creates the potential for an upward price spike, possibly targeting high-leverage traders. Such sudden moves are common in volatile markets, so traders should approach with caution and implement strong risk management strategies.
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What Traders Should Watch
Dogecoin often mirrors Bitcoin’s price movements, and this trend continues. As Bitcoin attempts to stabilize and recover, Dogecoin may follow. However, the possibility of further declines remains.
New buying pressure could help push Dogecoin’s price higher, but the overall market remains uncertain. The ripple effect from Bitcoin’s decline is one of the primary reasons behind Dogecoin’s sharp drop.
During volatile periods like these, leverage trading is especially risky. Traders are advised to be cautious, stick to proper risk management, or avoid leverage altogether. On the other hand, long-term investors may find this an opportunity to dollar-cost average, building their positions gradually.
Dogecoin’s next moves depend heavily on Bitcoin’s performance and broader market sentiment. As always, stay alert and trade responsibly.
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FAQs
Selling depends on your strategy; the market is volatile, and Dogecoin is at a critical support level, so holding or dollar-cost averaging could be an option.
Dogecoin dropped due to Bitcoin’s 11.25% decline, triggering market-wide bearish sentiment and increased sell-offs.
Dogecoin’s future depends on Bitcoin’s recovery and market trends; it’s speculative, so invest only what you can afford to lose.
Dogecoin dropped due to Bitcoin’s 11.25% decline, triggering market-wide bearish sentiment and increased sell-offs.
