Dogecoin is trading at $0.13 at press time after the day started at $0.12. It is up more than 7% in the last 24 hours, making it one of the to gainers.
The coin’s latest gains is a continuation of the previous day’s trend when it recovered from a three-day downtrend and closed with gains exceeding 4%.
Dogecoin’s latest spike occurred when most cryptocurrencies in the top 10 saw less than 3% increases in price, with Bitcoin and Ethereum registering no significant changes in price. What caused the hike?
A Rise in Open Interest
The data from Coinglass suggests that a rise in open interest rates is one reason for the most recent price improvement. The derivatives market is also seeing a surge in funding rates indicating more inflow to the asset.
According to the information, more traders are looking to purchase the cryptocurrency at a higher price as the number of unsettled future contracts reached $603 on July 20. Additionally, the futures funding rate significantly improved this week compared to the previous week.
It is worth noting that both metrics show increased interest from investors in the asset. The positive funding rate is a reflection of how many traders are willing to hold long. This means that more traders are bullish about next price action.
The most recent uptrend started on July 13 following the report of a lower-than-expected job growth in the US. The report sparked hope in an interest rate cut in September, increasing the probability by over 90%.
An interest cut will result in more surges for the crypto market, and Dogecoin will experience further increases. The anticipation for such cut, including the failed assassination on Trump resulted contributed to the over 25% the coin gained in the last seven days.
The uptrend may continue as the Republican presidential candidate will speak at an upcoming Bitcoin event. His stance is fueling more optimism among investors, who believe he’ll implement the El Salvador style of adoption if elected.
Amidst the growing bullish fundamentals, there are technical indications of an impending downtrend.
The Death Cross
The coin had a significant event on July 17. However, it took place on the chart, and prices may soon react to this phenomenon.
The 50-day moving average has been on a decline since April in response to the downtrends the coin had. The metrics trajectory although slow was heading for an interception with the 200-day moving average which has been on the rise for a while.
With both MAs seeing different trajectories, an interception is inevitable. The dreaded death cross took place on July 17 as both metrics intercepted. Traditionally, the latest appearance on the chart signifies the start of an impending downtrend.
Dogecoin Could Slip to $0.10
Although the coin is seeing notable increases, the death cross may indicate an impending change in market trend. Based on the previous crosses, it is almost certain the coin will retest critical supports. For example, during the previous cross, it lost over 25%. A similar one before this one saw the coin lose more value., losing over 50%.
Using the previous death cross as a metric, DOGE may experience an over 20% decline in the coming days. The chart also shows that the event took place some days ago. It is worth noting that effects are not instant. The downtrend may not start until after seven days.
With the 25% loss in view, the asset may lose all of its accumulated gains and retest $0.11. This mark has significant demand concentration that may halt the decline. This is also the 78% Fibonacci retracement level, adding to the strength of the mark.
A slip from this critical level may see the altcoin retest $0.10 in the coming days.
