This week, Dogecoin’s price action has captured the attention of traders, as the meme-coin saw a significant uptick after dipping towards the $0.13–$0.15 demand zone. This dramatic rise seems to be supported by increasing derivatives data, hinting that many market participants anticipate further gains.
Trader Interest Climbs Around $0.19 Resistance
Recent market data reveals a remarkable 16% increase in Open Interest, surpassing $2 billion. Moreover, we witnessed a staggering 400% jump in options volume. Such considerable growth generally suggests that traders are making substantial bets on potential upward movements.
The current focal point is the $0.20 resistance level. Should DOGE manage to close a daily candle above this threshold, it could pave the way for a possible ascent towards $0.27.
Technical analysis indicates that Dogecoin’s current setup is attracting attention from chart analysts. The Stochastic RSI has crossed above the 80 level, often signifying an overbought condition.
However, it is worth noting that cryptocurrencies can remain above overbought levels if buying pressure persists. Traders will be keen to observe substantial volume supporting any rally that crosses the descending trendline near $0.19, as a lack of volume could lead to a stagnation or retraction of gains.
Whales Return With Spot Inflows
Dogecoin recently recorded a net inflow of $8.20 million into spot wallets. This marks a significant change after several weeks of continuous outflows. In previous cycles, large holders have often transferred coins onto exchanges, whereas their recent actions indicate a shift towards accumulation. Such inflows from ‘whales’ frequently correlate with mid-term bullish trends.
On-chain metrics provide additional insights, showing an increase in Dogecoin’s MVRV Z-score, which has returned to 0.355 after accessing near-historical lows in late June. This figure indicates the average profitability of holders, and a rising score demonstrates that fewer are experiencing losses, potentially enticing new buyers into the market. However, it’s important to note that MVRV is a retrospective metric and does not serve as a predictor for future price action.
Network Activity Shows Mixed Signals
Analyzing network activity reveals a mixed landscape. Daily active addresses have decreased to 34,000, with transaction counts dropping to 15,000 as of July 3, a stark contrast to the 500,000 active addresses and transactions noted in the last week of June. Such declining usage could hinder the momentum of the current rally if retail participation doesn’t rebound promptly.
Despite these mixed indicators, the overall sentiment towards Dogecoin has improved compared to last week. The growing interest in options and increased Open Interest suggest a heightened speculative appetite. Additionally, large inflows into spot markets highlight that whales are re-engaging in the market. Nevertheless, waning network activity could present challenges for sustained upward movement in DOGE as daily addresses and transaction volumes need to show signs of recovery to bolster bullish conditions.
Featured image from Meta, chart from TradingView
