By Dogecoin Price Prediction as ‘Excess Bullish Leverage’ Leads to Sharp Drop – Is the Market Resetting?
Last updated: December 13, 2023 02:40 EST
. 3 min read
Dogecoin (DOGE) has pulled back sharply from the multi-month highs it hit on Monday at $0.1075 amid a flushing out of excessive bullish leverage that had built up during the cryptocurrency’s push higher in the past few weeks.
DOGE was last changing hands around $0.0940, down over 12% from Monday’s amid a wave of long position liquidations in the futures market.
As per coinglass.com, leveraged long futures positions worth over $9 million were liquidated on Monday, the largest amount in one day in at least three months.
The open interest-weighted funding rate paid to open a leveraged futures position has also dropped back from multi-month highs hit earlier in December and was last around 0.0233% versus Saturday’s highs of over 0.05%.
That shows that the latest punishing liquidation event for the bulls has dampened the demand to open fresh long futures positions, though the market’s bias still remains bullish with the funding rate still in positive territory.
Taken together, the latest major wipeout of long positions and drop in the funding rate suggests the Dogecoin market has swung back from a state of arguably excessive bullishness.
Whilst the latest calming of excessive bullishness has coincided with a sharp drop in the Dogecoin price, some may argue that the latest correction marks a positive reset for the market.
When overly-leveraged, weak-handed bulls are flushed out of the market amid short-term price dip, longer-term bulls with a higher tolerance for price volatility get a new opportunity to add to their positions.
These buyers form a stronger base for the DOGE price to see sustained upside, as they are much less likely to take profit or panic sell at the first sight of a short-term price decline.
Price Prediction – Where Next for Dogecoin (DOGE)?
With the broader market likely to continue trading with a downside bias in wake of recent US economic data failing to fuel fresh hopes for an interest rate-cutting cycle next year, Dogecoin’s price may continue to decline in the short term.
But dip buyers will surely be waiting on the sidelines to jump in, with the crypto market broadly in consensus that we have entered a new bull market cycle.
$0.0875 is a good area of price support for DOGE, with the 21DMA and November high coinciding nicely.
Medium-term price predictions are likely to remain bullish and if DOGE can break above resistance in the mid-$0.10s (which it failed to in recent days), the door remains open for a pump back to late 2022 highs in the $0.16 area.
DOGE Alternative to Consider – Meme Kombat ($MK)
While Dogecoin (DOGE) could offer good upside prospects for the months ahead, traders should always look to diversify their crypto holdings.
For those with a strong risk tolerance, investing in promising up and coming web3 project by buying into their token presales is one good way to generate potential quick exponential gains.
Cryptonews.com spends a lot of time analysing which presales have potential, and one such project that they are big fans of is an exciting new project called Meme Kombat.
Meme Kombat blends together the world of crypto gaming and gambling with its exciting platform where users are able to bet on the outcomes of exciting battles between characters based on some of the crypto world’s most popular meme coins.
Early $MK investors can also benefit from generous staking rewards, which are currently more than 100% annually.
The project has already raised close to $2.8 million, despite launching just weeks ago.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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