Dogecoin showed a sharp 14% price drop after a strong price increase earlier this month. The price decline was primarily driven by investors looking to realize profits at the six-month high.
However, Doge's gains could recover depending on the next moves of major investors.
Dogecoin Investors Selling
The realized profit-loss ratio of Dogecoin this week surged after last week's significant price increase. The spike in profit-taking marks a six-month high, signaling that many investors are looking to secure profits and exit the market. These profit-takers are losing confidence in further price increases of Dogecoin and attempting to leave the market.
Such behavior by short-term holders has significantly contributed to DOGE's recent price decline. The sudden change in investor sentiment reflects broader market uncertainty, with traders hesitant to wait for additional profits. This is putting pressure on the meme coin's short-term price outlook.
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Despite profit-taking, Dogecoin's overall macro momentum remains unaffected. This is proven by the decline in Liveliness. This indicator measures long-term holder (LTH) activity, which significantly impacts the coin's price. Currently, Liveliness continues to decline, indicating that LTHs are reluctant to sell their holdings.
The stability provided by LTHs played a crucial role in supporting Dogecoin's price during previous market fluctuations. Their lack of selling intention despite recent price movements could prevent a significant further decline.
DOGE Price Could Further Decline
At the time of writing, Dogecoin is trading at $0.233, positioned below a key resistance of $0.245. Despite the strong rise earlier this month, the altcoin has now lost a significant portion of its gains, with prices dropping 14%. The current price movement shows a bearish reversal, with a quick recovery seeming unlikely.
Considering the recent surge in selling activity, Dogecoin is likely to continue experiencing downward pressure. If selling persists, the price could break through the $0.220 support and potentially test levels around $0.198 in the coming days. As profit-taking continues, short-term recovery prospects diminish, suggesting a potential longer-term downtrend.
However, if Dogecoin can recover and use $0.245 as support, the altcoin could recover its recent losses. Supported by the resilience of long-term holders seen in Liveliness, a successful rebound at this level could push the price to $0.268. This would invalidate the bearish logic and help DOGE regain momentum.
