Dogecoin Whales Are Selling, But Key Support Will Hold
beincrypto.com 06 September 2024 08:43, UTC Leading meme coin Dogecoin (DOGE) has witnessed a series of problems over the past few months. Its price remains on a steady decline, driven by low trading volumes and waning market interest.
However, a group of optimistic investors—DOGE futures traders—continue to hold firm, betting on a potential rally despite the bearish conditions. How are they keeping the hope alive?
DOGE Traders Keep the Lights On
Dogecoin has traded within a falling wedge pattern since March. This pattern is formed when an asset’s price trends between two downward-sloping trend lines. The upper trend line acts as a resistance level, while the lower trend line serves as support.
Generally, this pattern is bullish because the asset’s price is expected to break above the upper trend line and continue its rally. However, the surge in DOGE’s selling activity has prevented this.
Despite DOGE losing half its value over the past six months, many futures traders remain undeterred and continue to open long positions. This confidence is reflected in the meme coin’s consistently positive funding rate since June. This is a mechanism used in perpetual futures contracts to ensure that the contract price stays close to the spot price.
When an asset’s funding rate is positive, more traders open positions in favor of a price rally than those holding the coin in hopes of a decline. In this case, Dogecoin’s funding rate is at 0.01% at press time.
However, not everyone shares this optimism—especially DOGE whales. This cohort of coin holders has noticeably reduced their holdings in the past few months.
According to data from IntoTheBlock, DOGE’s large holders’ netflow—a metric tracking the difference between coins bought and sold by whales—has dropped by 47% in the last 90 days.
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When this metric drops, large holders are selling. This is a notable bearish signal because it may prompt retail holders to do the same, putting more downward pressure on Dogecoin’s price.
Dogecoin Price Prediction: The Last Dip
DOGE’s technical setup assessed on a one-day chart shows it trades below its 20-day exponential moving average (EMA). When an asset trades under this key moving average, which tracks its average price over the past 20 trading days, selling pressure outweighs buying activity.
If Dogecoin’s selloffs continue, its price may fall toward the lower line of its falling wedge at around $0.085, representing support. However, if this support level holds, the market may see a shift in trend from negative to positive.
Read More: Dogecoin (DOGE) Price Prediction 2024/2025/2030
Indeed, Dogecoin could then rally toward the falling wedge’s upper boundary at $0.110. Breaking past this critical resistance level will trigger a 40% price breakout to $0.142.
