Dogecoin Faces 5% Plunge: Trading Signals Point to Increased Selling Pressure
Summary:
Dogecoin (DOGE) faced a 5% decrease in value, outpacing the general crypto market downturn. The decline corresponds with a decrease in futures open interest (OI) and reductions in funding rates, indicating a bearish sentiment among traders. Increasing 'whale activity' suggests institutional investors are cashing out, reinforcing the price correction. The In/Out of the Money Around Price (IOMAP) model reveals immediate resistance for DOGE in the $0.165 supply zone, with an added selling from this level potentially lowering the price further.
The virtual currency Dogecoin (DOGE) saw a 5% decrease in its value today, bringing it to a dipping point of $0.16192 as of May 28. This plunge in value surpasses that of the general digital asset market, which underwent a 1.47% slump within the same timeframe. Dogecoin's fall accompanies a 3.2% decrease of Bitcoin (BTC) within the last day.
DOGE experienced a noteworthy increase previously, skyrocketing by over 7.5% within the last month. Regrettably, the currency started facing a downturn commencing May 22 and May 26, with its value now 2.5% less than its record a week ago. The decline is in line with a reduction in open interest (OI) futures, which have fallen 37% from April's $1.67 billion to $1.04 billion according to Coinglass.
The funding rate for Dogecoin perpetual futures contracts showed a decrease too, from a May 23 rate of 0.0243% to 0.0118% as of May 28. Lowered funding rates and OI suggest a bearish outlook among investors, introducing a possible rise in the selling pressure on Dogecoin.
The recently witnessed market correction, leading to the liquidation of millions of dollars, also affected DOGE, dragging its price down to as low as $0.1512. There has been a significant amount of "whale activity", characterized by transactions exceeding $100,000 in DOGE. According to IntoTheBlock data, transactions ranging from $100,000 to $1 million have witnessed a 28% increment within the past week. Furthermore, transactions exceeding $1 million have seen a 55% surge over the last month. This rising trend implies institutional investors are cashing out on their earnings, fortifying the ongoing price correction.
DOGE's recent decline can be traced back to a prior period of negative divergence between its price and the relative strength index (RSI) on a weekly timescale. Despite DOGE's price increment from April 15 to May 28, the daily RSI dropped, indicating a deceleration in the upsurge and sparking traders to secure their returns.
The IntoTheBlock's In/Out of the Money Around Price (IOMAP) model displays an immediate DOGE resistance at the $0.165 supply zone, within the $0.163 to $0.168 range. In this range, nearly 97,980 addresses purchased approximately 7.03 billion DOGE. Increased selling from this level could apply added downward pressure, potentially lowering the price further. The next significant support level can be found at the 50-day simple moving average of $0.10.
Note: It's important that readers do their own research as all investments bear risks, and this article is not meant to serve as investment advice or suggestions.
Published At
5/28/2024 9:09:17 PM
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