Dogecoin's Path to Recovery Faces Challenges
Dogecoin (DOGE) recently experienced a 6% increase, attempting to retest the $0.11 mark. However, these gains were short-lived, as the meme coin quickly lost its upward momentum. This analysis explores the obstacles DOGE faces on its recovery path.
Realized Cap and Its Impact on DOGE
According to data from Santiment, Dogecoin's one-day Realized Cap hit a monthly low of $12.43 million. Realized Capitalization is a metric that represents the aggregate cost basis for coins on a blockchain, essentially reflecting the value of all coins at their last movement. When this value increases, it suggests that cheaper coins have been spent, indicating potential upward pricing. Conversely, a decrease in Realized Cap often results from capitulation, where more expensive coins are spent, leading to potential downward repricing. This context suggests that DOGE's price could struggle to surpass $0.10, despite previous positive signs.
Liquidation Heatmap Insights
The liquidation heatmap presents another hurdle for Dogecoin. This tool predicts potential price levels where large-scale liquidation might occur. Liquidation happens when an exchange forcefully closes an open position due to insufficient margin balance, aiming to prevent further losses. The heatmap uses liquidity concentration to gauge price direction, with higher liquidity at a price range (indicated in yellow) suggesting a likely price movement in that direction. Over the past 24 hours and a seven-day period, the heatmap shows a high concentration around the $0.10 level. Without changes, DOGE might remain near this price in the short term.
Technical Analysis: RSI and Fibonacci Levels
Technical analysis offers more insight into DOGE's potential movements. The daily chart's Relative Strength Index (RSI) remains below the neutral 50.00 region. As a momentum oscillator, an RSI below the midpoint indicates ongoing bearish dominance. Although the RSI has improved, it must rise above 50.00 to confirm a bullish trend. Therefore, DOGE's price might continue fluctuating below $0.09 and $0.10 unless this condition is met.
A review of Fibonacci retracement levels provides additional perspective. This indicator identifies potential price levels a cryptocurrency might reach. DOGE currently hovers around the $0.10 pullback region, aligned with the 23.6% Fibonacci level. If market conditions remain unchanged, DOGE might fail to rise beyond this point. However, increased buying pressure could enable DOGE to target $0.13, aligned with the 61.8% Fibonacci level. A broader market downturn, akin to the event on August 5, might cause DOGE to fall back to $0.080.
Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Always conduct your research and consult a professional before making financial decisions.
