Dogecoin has seen a sharp 14% price decline following a solid price surge earlier in the month. The drop in price is primarily driven by profit-taking at a 6-month high, as investors seek to secure their recent gains.
However, there is still hope that DOGE’s gains could be salvaged, depending on the next move from key investors.
Dogecoin Investors Are Selling
This week, the realized profit/loss ratio for Dogecoin spiked following a significant price surge in the previous week. The surge in profit-taking reached a 6-month high, signaling that many investors are choosing to cash out and secure their gains. These profit-takers are likely losing confidence in Dogecoin’s potential for further price increases, prompting them to exit the market.
This behavior from short-term holders has contributed heavily to DOGE’s recent price decline. The sudden shift in investor sentiment reflects broader market uncertainty, where traders are unwilling to wait for further gains. As a result, the meme coin’s short-term price outlook is facing pressure.
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Despite the profit-taking, Dogecoin’s overall macro momentum has not taken a hit, evidenced by the drop in Liveliness. This indicator measures the activity of long-term holders (LTHs), who tend to have a significant influence over a coin’s price. Currently, Liveliness continues to decline, signaling that LTHs are reluctant to sell their holdings.
The stability provided by LTHs has been crucial in supporting Dogecoin’s price during previous market fluctuations. Their unwillingness to sell, despite recent price movements, could prevent further significant declines.
DOGE Price May Witness Further Decline
At the time of writing, Dogecoin is trading at $0.233, sitting below the key resistance of $0.245. Despite the strong gains made earlier in the month, the altcoin has now lost a substantial portion of those gains, with the price dropping by 14%. The current price action shows a bearish reversal, and the likelihood of a quick recovery seems slim.
Given the recent surge in selling activity, it is likely that Dogecoin will continue to face downward pressure. If the selling persists, the price could fall through the support of $0.220, potentially testing the $0.198 level in the coming days. As profit-taking continues, the chances for a short-term recovery decrease, suggesting a prolonged bearish trend.
However, if Dogecoin manages to reclaim the $0.245 level as support, the altcoin could recover its recent losses. With the support of the resilience of the long-term holders, visible in the Liveliness, a successful bounce off this level could push the price towards $0.268. This would invalidate the bearish thesis and allow DOGE to regain momentum.
source: https://beincrypto.com