Dogecoin whales turn bullish, but short squeeze may not end the downtrend
Whales have been going long on Dogecoin even as retail remained short, a sentiment divergence that could have a say in price trends.
Dogecoin [DOGE] had tried to scale the $0.080 resistance zone at the start of July, but was unable to. It appeared that the bulls might be making another attempt to drive prices higher.
Founder and CEO of crypto intelligence platform Alphractal, Joao Wedson, observed in a post on X that whales were going long on Dogecoin while retail continued to hold short positions.
This sentiment shift occurred as DOGE fell just below the $0.07 round number earlier in July. The analyst believed that this change must persist if the memecoin can change its long-term downtrend measurably.
As things stand, a short squeeze is possible, but sustained demand is needed to help drive the memecoin towards recovery.
The 3-month liquidation map revealed that a price move toward $0.08 was more likely than a downward drop, based solely on liquidation concentrations.
The cumulative short liquidation leverage was stronger. This meant that a price move higher would force more liquidations, and these market buy orders in the perpetuals market could help Dogecoin climb even higher.
Yet, it is possible that such gains would quickly reverse and turn out to be just a short squeeze.
Let’s see if the price charts agree with the liquidation map.
Whale longs versus bearish structural trends
The February low at $0.08 was breached in June, making the $0.118 swing high the level that anchors the downtrend in place. Interestingly, the $0.081 level marked the 23.6% retracement level.
It is a short-term resistance zone, and has acted so in recent weeks. If reclaimed as support, a rally up to $0.108 is possible.
There is also a potential bearish scenario where Bitcoin [BTC] is unable to climb meaningfully past $65k. In which case, Dogecoin might make a final sweep of the $0.08 area before falling to new lows.
Final Summary
- Whales have been going long on Dogecoin even as retail remained short, a sentiment divergence that could have a say in price trends.
- A lack of strong buying pressure and the potential of a short squeeze to $0.08 meant a Dogecoin recovery remains unlikely.
