Dogecoin Eyes Rally After Breaking Downtrend
Key Takeaways
- Dogecoin (DOGE) is currently trading at approximately $0.2238 USD.
- A breakout above $0.25 USD could pave the way toward $0.35 USD.
- Strong short liquidations and a low MVRV Z-Score suggest further upside potential.
- At the same time, declining network activity and an extreme stock-to-flow ratio point to possible volatility.
Technical Outlook: Break of the Downtrend
DOGE recently broke out of a downward trend channel and successfully retested it as a new support zone. This confirms a bullish structure. The current price is around $0.2238 USD – an increase of 3.37% within 24 hours. The $0.25 USD level represents the next resistance. It previously served as support in February before turning into a supply zone.
A sustained breakout above this level could trigger a move toward $0.35 USD. If it fails, a short-term correction may follow.
Liquidations: Pressure on Short Positions Increases
Liquidation data shows a clear advantage for the bulls. On May 18, short positions worth $387,000 USD were liquidated – compared to only $65,000 USD in long positions. This imbalance suggests a potential short squeeze. In such a scenario, short sellers are forced to close their positions, creating additional buying pressure and potentially driving the price higher.
MVRV Z-Score: Valuation Supports Further Growth
The MVRV Z-Score currently stands at 0.94. This metric measures the ratio of market capitalization to realized capitalization and provides insight into the average profitability of investors. A value below 2.5 typically indicates that most holders are not sitting on large unrealized gains – a sign that selling pressure is likely low. This creates favourable conditions for a continued upward trend.
Stock-to-Flow Ratio: Scarcity or Warning Signal?
DOGE’s stock-to-flow ratio has risen to 99.53 – a historically high level. This metric measures the availability of new coins relative to the existing supply. A high value indicates scarcity. However, a sudden increase can also signal unusual market activity or upcoming volatility. In the past, such spikes have preceded both strong rallies and sharp pullbacks.
Network Activity: Short-Term Hype or Sustainable Usage?
The number of daily active addresses briefly surged above 500,000 in early May but quickly dropped back to 28,600. Transaction numbers also fell to 8,800. This development suggests that the recent price increase was likely driven by speculation rather than long-term usage.
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Derivatives Market: Mixed Signals
Total volume in the derivatives market fell by 22.05% to $3.46 billion USD – an indication of declining short-term speculation. At the same time, open interest (outstanding contracts) rose by 2.7% to $2.64 billion USD. This shows that many traders are holding onto their positions. Notably, open interest in options rose by 10.61% to $378,980 USD, while options trading volume dropped by 85.89%. This could indicate increased hedging against price fluctuations.
Our Assessment
DOGE is at a critical juncture. The technical structure, strong short liquidations, and a favourable MVRV Z-Score point to further upside potential. A breakout above $0.25 USD could initiate a move toward $0.35 USD. However, caution is warranted: declining network activity and an extreme stock-to-flow ratio indicate increased risk of volatility. Investors or those considering investing in Dogecoin should closely monitor price developments and wait for a clear signal accompanied by strong trading volume.
Sources
- TradingView
- CoinGlass
- Santiment
| Symbol | DOGE |
| Coin type | Alt Coin |
| Transaction Speed | Medium |
| Pros |
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| Cons |
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| Further practical applications | |
| Price | 0.216786 |
| 24h % | -3.36 % |
| 7d % | -10.82 % |
| 30d % | 36.32 % |
| 60d % | 24.23 % |
| 1y % | 40.73 % |
| Market Cap | $32,361,085,216.00 |
| Official Links | Website | Source Code |
| Socials | Reddit | X |
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