Dogecoin (DOGE) is currently facing significant challenges following a notable price decline. The cryptocurrency has dropped below the critical support level of $0.24, raising concerns among investors and analysts about its future trajectory.
Current Market Situation
The recent downturn has led to a confirmed descending triangle breakdown, suggesting the potential for further losses. With the price falling to a low of $0.2301, this represents a 7% decrease in just one day. Investors are now speculating whether DOGE will continue to decline towards $0.20 or if it might experience a rally of up to 400%.
Compounding the bearish sentiment is a significant decrease in network activity. Whale transactions have dwindled to only 66, while daily active addresses have fallen below 60,000, marking the lowest levels since October 2024. This decline indicates a waning demand for DOGE, raising concerns about its ability to recover in the near future.
Market Dynamics and Liquidations
Analysts are closely monitoring these trends, recalling that previous low network activity levels have led to challenges in maintaining upward momentum for DOGE. This has often resulted in increased liquidations and selling pressure. The broader bearish sentiment in the cryptocurrency market has further exacerbated Dogecoin’s downward trend.
On-chain data reveals a deterioration in market conditions, with futures open interest for DOGE decreasing by 3.9% to $2.15 billion. This shift reflects a change in trader sentiment, as evidenced by the surge in 24-hour liquidations, which have reached $9.23 million, with long liquidations accounting for $8.62 million of that total.
Potential for Recovery
Despite the challenges, some analysts maintain a hopeful outlook regarding Dogecoin’s recovery potential. One market analyst has pointed out that DOGE is nearing the completion of its fourth falling wedge pattern, which is historically a bullish setup. In previous cycles, similar patterns have led to significant rallies, including an 88% increase during the first falling wedge and a remarkable 445% surge during the third.
If historical trends hold true, Dogecoin could be on the verge of another substantial breakout, potentially pushing its price above $0.50 in the coming months. This potential for recovery is being closely watched by investors as they weigh the risks and rewards associated with DOGE.
ETF Proposals and Investor Interest
Adding complexity to the situation are several Dogecoin ETF proposals currently under review by the U.S. Securities and Exchange Commission (SEC). Prominent companies have submitted applications aimed at providing institutional exposure to the meme coin market. The SEC’s acknowledgment of one filing has sparked increased investor interest, with many closely monitoring for signs of approval.
If a DOGE ETF is approved, it could trigger a dramatic price surge similar to Bitcoin’s rally following the launch of its spot ETFs in January 2024. This potential approval is generating excitement within the crypto community, as it could significantly impact Dogecoin’s market dynamics.
Bearish Arguments and Support Levels
As the crypto community contemplates the potential outcomes for Dogecoin, bearish arguments for further declines remain compelling. The confirmed triangle breakdown, combined with declining network statistics, casts a shadow over DOGE’s immediate prospects. However, bullish sentiment persists, as the falling wedge patterns and excitement surrounding ETF proposals could ignite a rally that surpasses even the impressive gains seen in 2024.
Analysts emphasize that as long as DOGE remains above the critical support level of $0.19, the potential for a significant price increase remains viable. In the short term, the 4-hour chart indicates that the S1 support at $0.22836 is under considerable pressure, and a close below this level could lead to panic selling among investors.
📎 Related coverage from: coinchapter.com
