- The price of Dogecoin spiked by almost 19% from Monday, July 24
- The last time we saw similar buying pressure was on April 3
- A Twitter rebrand is the most likely cause of this sudden interest in DOGE
- Open interest rose to $512 million
- Still no on-chain signs of whale activity
The price of Dogecoin has been on the rise since July 24 and came up from $0.07 to $0.083 at its highest point on July 25 — which was an increase of 18.89%. The last time DOGE showed similar bullish price action was on April 3, when the price shot up by 36% in a couple of hours.
Simultaneously the price of Cardano was on a decline in that period, falling 4.8% and resulting in Dogcoine overtaking Cardano’s position in the market cap, which is now in the 8th place.
Many attribute this price rise to Elon Musk’s Twitter activity and the possibility of DOGE being a payment currency of the new Twitter rebrand with a creator fund that offers platform creators a profit share.
Elon Musk has been known to favor Dogecoin in the past, even dubbing himself the “Dogefather,” so close ties with the new payout mechanics in the new Twitter business model could be beyond speculative.
Even with the shaky fundamentals, the real question is, is this price rise sustainable? Can the price of DOGE commence its bull cycle in this market environment?
From its bull market mania, the price of DOGE has declined drastically. On May 8, 2021, it reached $0.76, which was its all-time high coming from $0.05 in March.
Since then, we have seen a continuous decrease as the cryptocurrency bear market hit in November 2021. Like the rest of the market, the price finally reached a plateau on June 18, 2022, and started forming a horizontal range. This range is between $0.051 support and $0.094 resistance.
At the end of October 2022, there was an attempt for a breakout above the range, but it ended shortly. The price spiked by 167%, from $0.059 to $0.15 on November 1. From there, the price declined and fell back to the horizontal range support level of $0.055 again on June 10. Finally, the price started to recover again from there, and today’s increase is part of that uptrend.
There isn’t much on-chain evidence to suggest whale activity. Only a cohort of 1M+ units shows increased holdings, while others have been stagnant or in a modest decline.
However, by looking at the addresses with balances greater than 1M native units, we can see that the current levels of around 4.57K addressed is still lower than on its previous spike of 4,628 on June 25, when the price of DOGE was being traded by 16% lower then it currently is.
This could mean that the leading factor behind the current increase is the derivatives market. By looking at the DOGE open interest chart, we can see a clear correlation between the rise in open contracts and the price rise.
This value reached $512M in open contracts today, which is close to the levels on the previous large upward spike on April 3. At that time, the OI reached $586 million, and before that, we had seen it correlating with the highest price spike at the end of October, when it reached $883M.
As seen on the charts and the comparison between periods with even higher price increases, at least for now, there isn’t much evidence to support a sustainable uptrend. In the previous days, we have already said that this pump is to be wary of.
Yes, the price has continued moving to the upside since then, but nothing has changed fundamentally, and the price is still in its most significant horizontal range. Until we see some on-chain accumulation activity, the price fluctuations can only be attributed to derivative traders who aren’t loyal to the trend.
They could cause long-term holders to take notice and potentially spark some activity, but this activity is yet to be seen.
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