Dogecoin, a prominent meme coin, has experienced a substantial decline over the past ten days, losing almost $8 billion in market capitalization. This downturn has affected investor sentiment and heightened market skepticism.
Investor reluctance is likely to delay Dogecoin’s recovery, as caution prevails among those considering re-entering the market.
Open Interest in Dogecoin has significantly dropped by $1.2 billion over the past week, falling from $5.05 billion to $3.85 billion. This decrease illustrates traders' waning confidence, prompting them to exit the futures market in an effort to mitigate further losses.
The reduction in futures trading indicates that investors are awaiting a more stable environment before initiating new positions. With decreased Open Interest, speculative activities around Dogecoin have subsequently slowed down.
The broader macro momentum for Dogecoin mirrors the existing bearish sentiment, which now extends beyond the derivatives market. The Chaikin Money Flow (CMF) indicator remains in negative territory, reflecting weak capital inflows. This hesitancy to allocate new investments is likely to delay any potential price recovery further.
Dogecoin's vulnerability is underpinned by the ongoing lack of inflows in the spot market. Traders remain cautious, restricting the meme coin's movements within a narrow range. Without increased inflows, DOGE may find it challenging to gain upward momentum.
Currently trading at $0.33, Dogecoin has dropped nearly 15% over the past ten days and is striving to maintain the support level at $0.32. Holding this threshold is crucial to preventing further devaluation and stabilizing its price action.
Persistent investor skepticism and diminished market confidence may prolong DOGE’s consolidation phase. If the sentiment remains unchanged, the meme coin could stay below the $0.36 mark and may even risk falling beneath $0.30. Conversely, if Dogecoin succeeds in transforming $0.36 into a support level, it could defy the bearish perspective. Surpassing this resistance might position DOGE for a recovery, potentially moving its price towards $0.39, which would help recoup some of its recent losses.