- The overall cryptocurrency market is in a downtrend, with $300 million worth of liquidations occurring.
- Dogecoin derivatives volumes have increased by 80% as short sellers prevail.
- According to the Relative Strength Index (RSI), DOGE is highly oversold, but there is one problem.
Dogecoin suffered a massive drop this Thursday as crypto bears placed their tokens in the crossfire of the ongoing market crash. DOGE, which lost more than 7% of its value in 24 hours, saw a total of $4.85 million liquidations on derivatives markets, most of which consisted of long positions.
Bulls Take a Hit as DOGE Hits 3-Month Low
According to the latest derivatives market data from CoinGlass, $4.8 million worth of long Dogecoin positions were liquidated, while liquidated short positions amounted to just $566,800 in 24-hour liquidations. This comes at a sensitive time for the biggest meme asset, as DOGE plunged to a three-month low today.
As Bitcoin (BTC) fell below $58,000, DOGE also slid into a lower support bubble between $0.099 and $0.117. According to IntoTheBlock, this support cluster contains 41.61B DOGE spread across 166,290 cryptocurrency wallets. If the current support cluster holds, Dogecoin will not face any significant resistance until $0.142, at which point traders are more likely to start taking profits.
Can Dogecoin Avoid a Downtrend?
In a broader sense, Dogecoin’s record-breaking liquidation is the largest in today’s cryptocurrency market crash. With total liquidations surpassing $321 million, DOGE ranks fourth in 24-hour liquidations, behind BTC at $91.51 million, Ethereum (ETH) at $71.9 million, and Solana (SOL) at $12.84 million.
Dogecoin’s younger meme peers, Dogwifhat (WIF) and Pepe (PEPE), faced the same liquidation tsunami, losing $3 million and $4.07 million respectively. According to CoinPaprika, DOGE is not under selling pressure on the spot market, judging by the integrated liquidity ledger, as DOGE bids outsourced nearly $1 million of the executed sells.
However, it should be noted that DOGE has a very high price correlation with Bitcoin, currently pointing to 0.91. This means that even if there is some selling pressure, DOGE’s price movements could be affected by large BTC sell-offs such as Mt. Gox or the German government. At the time of writing, DOGE briefly plunged below $0.11, accounting for a 30% loss in the month.
On the other side
- According to TradingView, Dogecoin’s 4-hour technical trading pattern shows that the Relative Strength Index (RSI) is extremely oversold, pointing to 11.43 in real-time.
- While this is a sign of resilience and plausible consolidation, it is also worth noting that Dogecoin’s Chaikin Money Flow (CMF) index is currently at -0.23, a figure below zero, suggesting decreasing liquidity.
Why this matters
Dogecoin operates on the second-largest blockchain using Proof-of-Work (PoW) consensus and has a market cap of $16 billion.
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