Declining ETF Interest Puts Pressure on Dogecoin as Price Nears Critical Support Level

Dogecoin (DOGE) is currently facing significant pressure as investor interest wanes, ETF inflows come to a halt, and selling activity increases. The meme-inspired cryptocurrency is nearing a crucial price level where many investors initially bought in, raising concerns about its potential downside if market confidence continues to decline. Meanwhile, isolated accumulation by large holders and historical cost levels indicate that the market may be ready for a pivotal shift.

Key Takeaways

ETF Interest Declines: Dogecoin-based ETFs like Grayscale and Bitwise have not seen inflows since December 2023, totaling about $2 million.
Decreased Whale Activity: Large holders have decreased their DOGE balances significantly, signaling a drop in participation from influential market players.
Bearish Market Sentiment: Data from derivatives markets show a rise in short positions, reflecting a cautious outlook among traders.
Critical Price Levels: Dogecoin is trading near the $0.123–$0.126 range, which has historically served as support, but a breakdown could lead to prices approaching $0.10.

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ETF Activity for Dogecoin Stalls Amid Softening Market Sentiment

A notable trend in Dogecoin's recent market activity has been the drop in momentum for its exchange-traded funds (ETFs). According to data, both Grayscale and Bitwise DOGE ETFs have failed to record any inflows since December 11, summing to a total of around $2 million since their inception. The combined assets under management are roughly $5.2 million, which is a tiny fraction of Dogecoin's overall market value. This minimal response starkly contrasts with other altcoin ETFs, particularly those associated with XRP and Solana, which have garnered hundreds of millions in inflows.

The ongoing lack of interest raises concerns regarding the long-term sustainability of funds focused on DOGE, especially considering their limited revenue potential at these asset levels. Overall, the ETF slowdown reflects a cautious sentiment within the market, as highlighted by the crypto Fear and Greed Index remaining in the 'fear' zone.

On-Chain and Derivatives Data Indicate a Bearish Trend

In addition to ETF concerns, on-chain data reveals a drop in activity among major holders. Wallets that hold between 100 million and 1 billion DOGE tokens have cut their balances by more than 1 billion tokens since early December. Also, the percentage of DOGE supply held at a profit has decreased to around 50%, indicating that fewer holders are enjoying unrealized gains.

The derivatives market adds to this cautious perspective. More than half of DOGE's open derivatives are now short positions, with over $5 million in long positions liquidated in just a 24-hour period. The open interest has also diminished, suggesting a waning speculative interest rather than an aggressive buying approach.

At present, Dogecoin trades within the $0.123–$0.126 range—an area that has consistently provided support since April. It remains positioned below key moving averages, with momentum indicators such as MACD and RSI suggesting ongoing downward pressure. A breach below this range could lead to the psychological threshold of $0.10 being tested.

Analysts have pointed to historical support levels near $0.074, where approximately 28 billion DOGE last exchanged hands. While a drop to this level would necessitate further decline in sentiment, current market conditions indicate that Dogecoin is nearing a critical cost-basis area. This zone could determine if sellers maintain their upper hand or if long-term holders begin to re-enter the market.

Cover image from ChatGPT, DOGEUSD chart from TradingView.