Despite facing challenges with low liquidity, Dogecoin (DOGE) is experiencing increased accumulation and derivatives activity that may trigger a bullish rally.
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DOGE, despite ranking high in market capitalization, has attracted the lowest liquidity among top memecoins.
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Analysis showed that DOGE could reach new heights, as technical indicators point to a potential breakout.
Dogecoin’s low liquidity contrasts with rising accumulation and derivative activities, hinting at potential price recovery.
Low liquidity puts DOGE behind
CoinMarketCap’s 90-day performance index shows that among the leading memecoins by market capitalization, Dogecoin has attracted the least liquidity, despite holding a $28.6 billion market cap. As of writing, DOGE has gained only 0.04% in the past ninety days. In contrast, FARTCOIN, with a $1.11 billion market cap, has surged by 368% over the same period.
Source: CoinMarketCap
Despite this underperformance, market analysis indicates that DOGE could be gearing up for a rally. On the daily timeframe, Dogecoin has traded into a critical level—an ascending support line. This zone could act as a catalyst for a major price move, with a target set at $0.25, representing a 33% rally from the current price level.
Source: TradingView
However, if DOGE fails to build sufficient momentum, the price could reverse and retest the origin of the ascending pattern near $0.14.
Retail traders are taking sides
Retail traders have begun taking positions in the derivatives market, with a noticeable uptick in long bets. At press time, the Long/Short Ratio stood at 1.01, signaling a tilt toward bullish sentiment. A ratio above 1 implies higher buying volume than selling volume, which strengthens the case for a rally.
Source: CoinGlass
A close examination of Open Interest (OI) in both options and futures contracts shows a steady rise. OI represents the total value of unsettled derivative contracts within a specific period. At the time of writing, OI in the Futures market has reached $2.06 billion, while the options market stands at $347,000. Sustained growth in OI alongside increasing buy volume suggests that DOGE may continue climbing.
DOGE could see more inflows
In the past 24 hours, DOGE has seen notable inflows, with $4.77 million worth of tokens moved into private wallets by spot traders.
Source: CoinGlass
When a large amount of tokens moves off exchanges and into private wallets, it typically indicates accumulation in anticipation of a long-term rally. This also implies that the tokens are less likely to return to the market for sale. If such inflows continue, DOGE could trend toward the $0.25 target outlined on the chart.
Conclusion
The current market dynamics indicate that while Dogecoin is grappling with liquidity challenges, heightened retail interest and accumulation could pave the way for a potential rally. Investors should monitor key price levels and market sentiment to assess the likelihood of verifying future bullish movements. In conclusion, continued accumulation might set the stage for a promising recovery.
