Dogecoin: Why the current DOGE rally is at the mercy of short-term holders

  • Short-term DOGE investors could short memecoin for gains
  • DOGE’s current bullish rally may be subject to speculation

Not so long ago, crypto investors were showing disinterest in Dogecoin [DOGE]. Its price action was relatively dormant between June and October. However, its November performance could be considered remarkable thanks to renewed investor interest.

More importantly, the latest developments could instill new hope for the future of cryptocurrency.

Read Dogecoin [DOGE] price prediction 2023-2024

The acquisition of Twitter by Tesla founder Elon Musk has reignited interest in Dogecoin. The billionaire entrepreneur previously spoke of DOGE in 2021. The acquisition raised hopes that Dogecoin would be integrated into the microblogging platform. Musk might be interested in going in that direction according to recent reports.

However, there was still no official confirmation of Twitter’s plans to integrate Dogecoin as a payment method. Still, such a development wouldn’t be far-fetched given Musk’s support for cryptocurrency. More importantly, if Twitter sees such a development, it will give DOGE exposure to hundreds of millions of people.

Adoption of Dogecoin on such a scale can potentially trigger a surge in demand and allow it to secure more utility. This was one of the main reasons why DOGE investors suddenly became interested in memecoin again. Especially since it was greatly reduced in 2022.

Assessing Current Dogecoin Demand

Dogecoin’s price action managed a 47% rally from last week’s lows to its latest high earlier this week. It recently broke above the 50% level of the Relative Strength Index (RSI), as well as the 50-day moving average, as the bulls regained relative strength.

Source: Trading View

Since there is no official confirmation of Dogecoin’s integration with Twitter, the current rally is highly speculative. But can the bulls sustain the rally at least until it is oversold?

The average age of DOGE coins has seen a continuous rise over the past 20 or so days. It was confirmation that more buyers were opting for HODL. Despite this, most holders in November did not make a profit according to the HOLD wave metric of realized market capitalization. This could be because most investors entered on the first and second week of November retracement.

Dogecoin HODL Metrics

Source: Santiment

The observations above indicated that Dogecoin investors are gradually regaining confidence. However, this does not necessarily mean that he will continue to rally. The latest rise could prompt investors who hit last week’s lows to take profits.

A review of DOGE’s supply distribution revealed that there was already some selling pressure from addresses holding between 1 million and 10 million coins. This was a confirmation of short-term profit taking that could limit the ongoing bull run.

Dogecoin Supply Distribution

Source: Santiment

Dogecoin continues to see some upside, likely because other top whale categories continue to pile up. The short-term bull run could turn into a major rally if Elon Musk confirms the Dogecoin-Twitter integration. Otherwise, selling pressure could erode current gains, especially if the market remains bearish.

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