Dogecoin (DOGE) saw a significant price drop over the weekend, falling below $0.22 after large holders sold over 170 million tokens within 24 hours. This sell-off caused the price to slide from $0.24 to around $0.215.
Whale activity coincides with the broader decline of meme coins, resulting in a nearly 10% loss for Dogecoin. Although this move has raised concerns about further bearish pressure on the cryptocurrency, the coin has increased by 4.49% at the time of writing.
Dogecoin's price drops as whales sell off 170 million DOGE.
Recent data shows that large whale investors have significantly reduced their DOGE holdings. According to Santiment, addresses holding between 10 million to 100 million DOGE have reduced their supply by approximately 170 million tokens in just one day.
This decline has reduced the total holdings from 23.91 billion to 23.74 billion DOGE. The sharp sell-off contributed to Dogecoin hitting a one-week low on May 17.
At the same time, trading volume of Dogecoin has decreased by over 34%, according to CoinMarketCap. The decrease in volume indicates weakened demand amidst the sell-off. The combination of whale sell-offs and low trading activity suggests a cautious outlook on the short-term price volatility of Dogecoin.
Derivatives data reverse the downtrend as DOGE traders incur losses of $7 million.
The derivatives market for Dogecoin prices also reflects a downtrend. Data from Rekt shows that long positions worth $6.78 million have been liquidated in the last 24 hours.
Short positions also incur losses but to a lesser extent, with $1.14 million wiped out. The total liquidation amount for the day reaches nearly $7 million, primarily affecting leveraged long traders.
Open interest in Dogecoin futures dropped by 6.9%, closing at $2.58 billion. This drop corresponds to over $290 million in closed contracts, indicating reduced trader confidence in a quick recovery. The overall long-short ratio is about 0.94, suggesting a slight increase in short positions compared to long positions across the market.
Despite these developments, experienced traders remain optimistic. Currently on Binance, long positions outnumber short positions, with a buy-sell ratio of 3.26.
Data from professional traders seems to signal that prices will recover soon. However, the overall downtrend is offsetting the short-term bullish trend in the market
Technical analysis of Dogecoin shows that support at $0.21 is being held.
Technically, Dogecoin's price has moved within a descending channel on the four-hour chart. Recently, it found support near $0.21 and bounced up slightly but remains vulnerable. A drop below this support level could push the price down to $0.17, reversing the recent gains made after Bitcoin rose above $100,000.
After a previous decline, there is now a new positive indicator from CMF, reading +0.11. Increased sales may prevent the price from dropping further. Only if Dogecoin moves above $0.24 can the new bearish trend stop.
However, Dogecoin has moved down to the lower band, and a short correction may occur soon, as seen by the Bollinger Bands. If the $0.21 mark holds, the price may recover and attempt to reach the resistance level of $0.23. Volume has now decreased by nearly half, so the price may not change much at this moment.
Liquidation trends and market volatility
The liquidation prices of Dogecoin futures over the past month indicate a highly volatile market. In mid-May, forced liquidations due to price drops amounted to at least $14 million within 12 hours. As prices reached $0.25 to $0.30 and then sharply declined, leveraged long-term traders were often affected.
On the other hand, short-sell liquidations occur when prices surge. Short-sell liquidations spiked at the end of April and early May, reaching between $7 million to $14 million during short price recoveries. This pattern shows how leveraged positions on both sides face forced exit in unstable fluctuations.
Dogecoin's price has risen from nearly $0.05 to around $0.30 in the past month. Higher volatility leads to larger liquidation volumes. Rapid declines result in prolonged liquidations, while sharp increases trigger quick liquidations. Due to this tug-of-war between traders, the token's price continuously fluctuates. At the time of writing, DOGE is trading at $0.2241.