Dogecoin extended its bearish streak, breaching the $0.08 support level. In doing so, the memecoin dropped to a low of $0.079 for the first time in nearly three weeks.
As of this writing, Dogecoin traded at $0.07907, down 5.54% on the daily charts. With the recent price drop, the memecoin fell below the 9- and 21-day moving averages, validating this bearish structure.
Dogecoin rising liquidation sparks panic selling
After Dogecoin [DOGE] dropped below $0.08, it sparked massive liquidations for leveraged positions.
According to CoinGlass data, $7.68 million worth of long positions were liquidated. Such high levels of liquidations showed that traders were bullish and expected the price levels to hold.
In addition to the forced exit, the price dip and liquidation caused fear, prompting traders to panic and close their positions.
Looking at the perpetuals, the Sell Volume surged to 1.3 billion while the Buy Volume dropped to 1.1 billion.
At the same time, the Net buying also remained negative, dropping to -1.1 billion. With sellers outpacing buyers, it suggests more perps positions closed.
The same market behavior was observed on the futures side. Over the past 24 hours, $460 million flowed out of futures compared to $413 million in Inflows.
As a result, the memecoin’s Futures Netflow dropped 459% to -$46 million, a clear sign of aggressive futures selling.
Is DOGE at risk of further losses?
Dogecoin is experiencing strong bearish pressure, largely driven by the weakness in the Derivatives market. Examining the memecoin’s Relative Strength Index (RSI), this momentum indicator dropped into the oversold area.
At 28, the RSI shows that bears have total control of the market. Often, such a market setup has preceded extended market weakness.
Therefore, if selling activity in the derivatives market continues, Dogecoin is likely to incur further losses and drop towards $0.075.
However, activity in the spot market remains markedly different. Looking at the Spot activity, it seems traders continue to buy the dip.
In fact, the memecoin’s Spot Netflow dropped to -$7.7 million, suggesting higher outflow. The decline in NetFlow suggests that holders lack the incentive to sell.
Thus, with sellers totally exhausted on the spot, even a small buying activity is enough to spark such a shift. Often, such market conditions have worked extremely well for the market and preceded recovery.
Therefore, if the market conditions position DOGE to recover. First, the memecoin must reclaim $0.08 and close above $0.085 in the short term.
Final Summary
- Dogecoin [DOGE] dropped 5%, breached $0.08 support, and dropped to a three-week low of $0.079 as traders panicked and exited.
- DOGE sellers on the spot have been exhausted, with no incentive to sell, leaving the market a chance to recover.
