This article is also available in Spanish.
The cryptocurrency market saw the largest leverage elimination since April 2021 yesterday, December 9, as reported today. Amid the market upheaval, Dogecoin (DOGE) is one of the altcoins that is showing significant signs of strength. In a post on
Here’s Why Dogecoin Looks “Amazing”
Despite the market decline, Dogecoin managed to maintain the most crucial support level. CRG shared the graphic below and commented: “DOGE looks incredible. The whole market got shit done but barely flinched and didn’t break the structure. Now funding has been fully restored and a ton of OI has been wiped out. It won’t be long before things get tough again, IMO.”
The chart reveals several critical insights that support his optimistic outlook for DOGE. First, Dogecoin has maintained a crucial uptrend line on the 4-hour chart (DOGE/USDT). This trend line has acted as a dynamic support level that Dogecoin price has touched but not fallen below on three separate occasions since mid-November.
Related reading
Each touch of this trend line triggered a rebound for the Dogecoin price, suggesting strong buyer interest at these levels. This alignment with the uptrend line is crucial because it indicates not only support but also growing confidence among investors every time the price drops to this line and subsequently recovers.
Resistance, on the other hand, formed near the $0.47 mark. This level has been tested several times and every attempt to break through has met resistance. Repeated tests of this resistance level without a breakthrough could typically suggest a consolidation phase, which could potentially trigger a stronger move higher if market sentiment changes positively.
Furthermore, the chart shows a notable reduction in open interest in stablecoin margin contracts. According to Coinglass data, $86.29 million of long DOGE positions were liquidated on December 9, the highest level since the 2021 bull run.
Related reading
This reduction in open interest represents a major “washing” of speculative positions, typically seen as a market reset in which weaker hands exit and excess leverage is reduced. Notably, this cleanup of market participants could be another clue that a more sustainable upward move is brewing.
Another vital aspect shown in the chart is the restoration of funding rates to lower levels, which is significant as it reduces the cost of holding long positions. Lower funding rates may encourage new buying activity, especially from participants who had previously been sidelined due to the high costs associated with maintaining leveraged positions.
CRG’s analysis also includes an observation on Cumulative Volume Delta (CVD) for both futures and spot markets. The CVD for futures has moved below that of the spot market, indicating that futures traders may be taking more bearish positions or closing existing positions more aggressively than spot traders. This divergence suggests that the spot market, which is generally less speculative, remains bullish, while acting as a buffer against bearish futures markets.
At the time of writing, DOGE was trading at $0.40.
Featured image created with DALL.E, chart from TradingView.com