Dogecoin’s Current Recovery May Be Halted As Open Interest Drops To $330 Million

The popular memecoin, Dogecoin, has recently shown a robust recovery, gaining momentum in the past few hours. This uptick follows a period where investors actively sought to benefit from a recent dip in its price. A notable accumulation of DOGE occurred after its value hit a low of $0.068. Despite this, the declining interest in Dogecoin futures by traders is contributing to a decrease in market volatility, posing a concern to the patience of the market.

There’s No Significant Hurdle Toward $0.082

Information from Coinglass indicates a significant liquidation of approximately $5 million in long positions following a drop in Dogecoin’s price to $0.072. With the price now experiencing a notable recovery, there’s a bullish outlook for the continuation of Dogecoin’s bullish trend.

Data provided by IntoTheBlock shows that the number of Dogecoin holders at the $0.082 price level is relatively low. Only around 266,000 addresses hold Dogecoin near this value, compared to about 396,000 holders at the $0.07 level. This situation, where the support level is stronger than the resistance, suggests a favorable scenario for Dogecoin’s price to maintain its recovery momentum without significant obstacles.

As the open interest (OI) in Dogecoin continues to decrease, there’s been a corresponding reduction in the coin’s volatility. The OI, a measure of market activity and trader interest, has fallen from a seven-week high of $419 million to a current low of $330 million. This decline indicates a declining interest from traders in initiating futures positions. Consequently, the volatility rate has now stabilized at around 52%.

Interestingly, the market sentiment appears to be shifting towards bulls, as seen by the increasing long/short ratio, now approaching 1.48. At present, 59.7% of traders are opting for long positions, while only 40.3% are favoring short positions.

What’s Next For DOGE Price?

Dogecoin experienced a surge after successfully rebounding from the crucial $0.07 level. However, the momentum seems short-lived as bulls struggle to push the price beyond the EMA20 trend line. As of writing, DOGE price trades at $0.074, declining over 0.36% from yesterday’s rate.

This inability to sustain levels above the critical resistance point has triggered a retracement and it has boosted sellers’ confidence. Here, buyers are expected to make a stand, attempting to hold the momentum. Should they succeed, the DOGE price might witness a steady climb back to $0.082. This level is critical; surpassing it could potentially lead to a rally towards the $0.1 mark. However, bears are set to defend this level strongly.

On the other hand, if the price breaks below the 200-day EMA on the 4-hour price chart and closes under it, it may indicate a phase where Dogecoin consolidates within the bearish region of $0.58-$0.65 for a while.