Dogecoin Faces Major Market Challenges: Is a Larger Correction Ahead?

Dogecoin (DOGE), like many cryptocurrencies, is experiencing increased selling pressure, leading to significant drops and the breach of crucial support levels. As the market weakens, concerns about a deeper downturn grow, fueled by diminishing speculative interest and outflows from major investors.

Key Takeaways

Dogecoin has fallen below important support levels, confirming a bearish trend.
The cryptocurrency has decreased more than 8% in the last 24 hours, losing momentum and failing to regain key Fibonacci retracement levels.
Persistent outflows and reduced interest in derivative markets are contributing to a weak market structure.
Recent launches of Dogecoin ETFs have not attracted expected institutional interest, further impacting its market performance.

Dogecoin DOGE DOGEUSD

dogecoin price doge dogeusd

Dogecoin's Support Levels Crumble Amid Selling Pressure

Dogecoin has recently fallen below significant support areas after breaking a bullish trend line on its hourly chart. This downturn continues a multi-day decline, with the price now trading around $0.13, below the 100-hour simple moving average. The MACD momentum indicator shows increasing bearish strength, and the Relative Strength Index (RSI) is below 50, indicating weakness in buying pressure.

In the past 24 hours, Dogecoin has slipped over 8%, breaching multiple Fibonacci retracement zones and struggling to regain a foothold above the 23.6% level of its latest price swing. Analysts indicate that immediate resistance sits near the 50% retracement of the recent drop. For the market to stabilize, a close above this level is essential.

If Dogecoin fails to break through these resistance levels, selling pressure may persist, and the price could retest recent lows if no stability occurs in the market.

Weak Market Dynamics Worsen Dogecoin's Outlook

Current trends in the spot market suggest ongoing distribution, with recent data revealing a $5.7 million outflow that continues a multi-month trend of decreasing accumulation by large holders. Previous inflows that supported price rallies toward $0.30 have turned negative, showing a decline in confidence from major investors.

The situation in derivatives markets further illustrates this weakening structure. Open interest has fallen by over 9%, as traders are opting to unwind their positions instead of taking on new exposure during price declines. Although long-short ratios display a slight long bias, price movements have repeatedly invalidated these positions, causing liquidation events when Dogecoin attempts to exceed short-term moving averages.

These failed recovery attempts have left Dogecoin beneath declining exponential moving averages, which range between $0.154 and $0.202, indicating an overall bearish trend.

Recent Dogecoin Exchange-Traded Funds (ETFs) have not provided the necessary support for the memecoin. Combined inflows from prominent issuers have barely surpassed $2 million, which falls short of expectations and is dramatically lower than the initial flow figures seen in Bitcoin or Ethereum funds. This lack of demand suggests a dwindling institutional interest in Dogecoin, adding to the negative market sentiment.

In the meantime, market activity appears to be shifting towards assets that focus on utility and payment solutions. Diminished trading volume and a lack of activity from big investors indicate a potential move away from meme coins toward projects with faster adoption and practical use cases.

Cover image from ChatGPT, DOGEUSD chart from Tradingview.