Key insights:
Dogecoin whales are selling off significant amounts of DOGE, indicating a risk-averse sentiment.
A decrease in open interest and daily active addresses suggests waning demand for DOGE.
DOGE’s rising wedge pattern indicates a potential bearish reversal with a possible price drop of 45%.
Dogecoin (DOGE) has seen a decline of over 24% after reaching a multi-month high of $0.28 on July 21. Consequently, the largest holders of the memecoin have been offloading DOGE amidst recent price declines, reflecting their lack of confidence in a recovery in the upcoming weeks.
Dogecoin on-chain metrics suggest further declines
Investor enthusiasm for DOGE appears muted according to derivatives data. Dogecoin’s futures open interest (OI) has fallen to $3.24 billion from a peak of $5.35 billion on July 22. This 8% drop since Sunday indicates reduced speculative positions and fewer traders betting on short-term price increases.
Wallets holding $10-$100 million in DOGE have seen a 6% reduction since late July, according to Santiment data.
This coincides with an earlier transaction flagged by Whale Alert, where 900 million DOGE, valued over $200 million, was transferred to Binance by an unidentified whale, raising concerns about short-term selling pressure.
Generally, when large holders distribute assets during price declines, it indicates they perceive risks of further drops.
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Additionally, the number of daily active addresses on the Dogecoin network has significantly decreased to 58,000, down from a peak of 1.65 million in Q4/2024 and 674,500 in July, indicating weak network activity.
A drop in active addresses suggests reduced user engagement on the network, possibly indicating decreasing retail interest.
DOGE rising wedge pattern targets $0.12
From a technical standpoint, the sell pressure on DOGE could intensify if it breaks below a rising wedge pattern.
In technical analysis, a rising wedge is a bearish reversal chart pattern characterized by two converging trend lines connecting higher highs and higher lows. This convergence signals a loss of momentum among buyers.
The current DOGE price is testing the support provided by the lower trendline of the wedge at $0.218.
A break below this level could lead to a significant price decline, with a technical target from the wedge set at $0.12, marking a 45% decrease from current levels.
The relative strength index (RSI) also indicates weakness, having fallen to 49 from overbought conditions of 85 on July 20, suggesting that bearish momentum is building.
As previously reported by Cointelegraph, DOGE must hold above the $0.19-$0.20 range, or the 100-day and 200-day moving averages, to prevent further declines toward $0.16.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
