- Dogecoin saw negative sentiment but steady social media engagements.
- Liquidity clusters could be key for a DOGE reversal.
Dogecoin [DOGE] faced rejection from the local resistance zone at $0.165. This level was also the high of a range the meme coin traded within in April.
Since the high of Monday the 6th of May, DOGE has registered losses of 12%.
A recent AMBCrypto report noted that a large chunk of Dogecoin holders were still in profit. The retracement in recent weeks was deep, undoing all the gains made in the latter half of March.
Yet, the selling pressure from these holders was not as heavy as feared.
Does this mean investors are confident that Dogecoin would outperform the market?
Source: Santiment
To answer this question, AMBCrypto analyzed the social metrics from Santiment.
Investor confidence did not look hefty. It has been negative since April as prices took a turn below $0.2, turning the level to resistance.
The social dominance saw spikes, but the social volume did not change much. This too does not show bullishness but suggests that Dogecoin’s social media mentions have at least been consistent.
Source: Santiment
Looking at the on-chain metrics, we see that the daily active addresses have fallen dramatically from the February highs. It has been consistently low in the past six weeks.
This was a sign that unique addresses were not involved in transactions, which pointed toward lowered demand.
The transaction volume was relatively consistent in the first half of April. Since then, it too saw a dramatic decrease toward the end of the month.
It has recovered somewhat over the past ten days, which was encouraging, but not necessarily bullish for the token.
The dormant circulation saw a large spike on the 26th of April.
It indicated a large amount of tokens were transferred, likely for selling. Since then, the metric has been quiet, signaling muted selling pressure.
Analysis of the liquidity chart pointed to the next direction for DOGE
Source: Hyblock
The cumulative liquidation levels delta was highly negative. This showed that short liquidations outweighed long liquidations by a considerable amount.
In turn, we can expect prices to climb higher to wipe out these liquidations.
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This might come after the nearest pockets of liquidity at $0.147 and $0.144 are taken out.
Hence, scalp traders would want to see a move into this $0.144 liquidity cluster followed by a bullish short-term reversal toward $0.155-$0.16.
