Dogecoin has struggled to recover from the flash crash that rocked cryptocurrency markets on Wednesday. After losing its hold on $0.09, DOGE price has since been relegated back to low levels of $0.08, where it continues to trade at the time of this writing. Interestingly, this is happening at a time when memecoin trading volume is increasing significantly. What is going on?
Dogecoin trading volume increases by over 190%
Dogecoin’s daily trading volume saw its biggest surge on the last day after the price fell. As interest in the coin grew, so did trading volume, ultimately leading to an increase of over 190% in daily DOGE trading volume.
According to CoinMarketCap, this increase in trading volume pushed trading volume to over $1.12 billion in a single day. This equates to about 9% of the volume to market capitalization ratio, which is very good for the asset.
Source: CoinMarketCap
However, despite this rise in interest, DOGE has not enjoyed any recovery. Instead, as of this writing, the price is still sitting at $0.082. Additionally, prices fell more than 10% during the same period, while weekly gains were completely wiped out.
Why is DOGE price struggling?
The reason DOGE price is not moving seems to be because more selling pressure is being put on the asset, especially by large investors. Whales holding significant amounts of Dogecoin appear to be selling their holdings.
An example of this is a transaction reported by Whale Alert, an on-chain whale tracker. At the time, a transaction carrying 300 million DOGE worth just over $29.6 million was being sent to the Binance exchange.
🚨 300,000,000 #viceroy (24,629,096 USD) was transferred from an unknown wallet to: #Binancehttps://t.co/M3WBb9bPOW
— Whale Alert (@whale_alert) January 4, 2024
Now, transactions like this can have a negative impact on cryptocurrency prices. This is because sending coins to an exchange can often mean that the holder decides to sell them. Given this, it could put a lot of selling pressure on the price, keeping the price low, as was the case with Dogecoin.
There were also several large Dogecoin transactions heading to the exchange in the past day. An initial transaction of 82 million DOGE worth $6.74 million was shown heading to the Robinhood trading platform. An hour later, Whale Alert reported another large transaction, this time delivering 102.27 million DOGE worth $8.4 million to Robinhood. If all of these trades were made with the intention of selling, this would explain why DOGE prices continue to struggle even amid the market recovery.
But not all transitions have been bearish. This is especially true for these large investors. In one transaction reported by Whale Tracker, over 151.68 million DOGE worth $12.49 million were moved from Robinhood to an unknown wallet. These transactions are more optimistic as they suggest that owners may be moving their coins to their personal wallets with the intention of holding on to them at a better price.
DOGE bulls fail to hold price | Source: DOGEUSD On Tradingview.com
Featured image from Inside Bitcoins, Chart from Tradingview.com
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