Why Did Dogecoin Price Drop Below $0.22 And What Will Happen Next?

Dogecoin (DOGE) has witnessed a significant bearish trend over the weekend, falling below $0.22 after large holders sold over 170 million tokens within 24 hours. This sell-off caused the price to slide from $0.24 down to around $0.215. Whale activity coincides with the broader decline of meme coins, leading to a nearly 10% loss for Dogecoin. Although this move has raised concerns about further bearish pressure on the cryptocurrency, the coin has increased by 4.49% at the time of writing. The price of Dogecoin falls as whales sell off 170 million DOGE Recent data shows that large whale investors have significantly reduced their holdings of DOGE. According to Santiment, addresses holding between 10 million and 100 million DOGE have decreased their supply by about 170 million tokens in just one day. This decline has reduced the total holdings from 23.91 billion to 23.74 billion DOGE. The strong sell-off contributed to Dogecoin hitting a one-week low on May 17. At the same time, the trading volume of Dogecoin has fallen by more than 34%, according to CoinMarketCap. The decrease in volume indicates weakened demand amid a sell-off. The combination of whale selling activity and this low trading volume suggests a cautious outlook on the short-term price volatility of Dogecoin. Derivatives data reversed the bearish trend as DOGE traders suffered a loss of 7 million dollars. The derivatives market for Dogecoin prices also reflects a bearish trend. Data from Rekt shows that long positions worth $6.78 million have been liquidated in the past 24 hours. Short positions also incurred losses but to a lesser extent, with 1.14 million dollars wiped out. The total liquidation amount for the day reached nearly 7 million dollars, primarily affecting leveraged buy traders. The open interest in Dogecoin futures contracts fell by 6.9%, closing at $2.58 billion. This decline is equivalent to over $290 million in closed contracts, indicating that traders' confidence in a swift recovery has waned. The overall long-short ratio is about 0.94, suggesting that short positions slightly outnumber long positions across the market.

Despite these developments, experienced traders remain optimistic. Currently on Binance, the long positions are higher than the short positions, with a buy-sell ratio of 3.26. Data from professional traders seem to signal that prices will soon recover. However, the overall bearish trend is offsetting the short-term bullish trend of the market. Technical analysis of Dogecoin as support at $0.21 is held. Technically, the price of Dogecoin has been moving within a descending channel on the four-hour chart. Recently, it found support near $0.21 and bounced up a bit but remains vulnerable. A drop below this support level could push the price down to $0.17, reversing the recent gains made after Bitcoin surged above $100,000. After a previous decline, there is currently a new positive signal being prepared by the CMF, reading +0.11. Increased sales may keep the price from falling. Only when Dogecoin moves above $0.24 can the bearish trend potentially stop.

However, Dogecoin has moved down to the lower band, a short correction may occur soon, as seen by the Bollinger Bands. If the 0.21 dollar mark holds, the price may recover and try to reach the resistance level of 0.23 dollars. The volume has now decreased by nearly half, so the price may not change much at the current time. Liquidation trends and market volatility The future liquidation price of Dogecoin in the past month shows that the market is very volatile. In mid-May, forced liquidations due to a price fall of at least 14 million dollars within 12 hours occurred. When the price reached 0.25 to 0.30 dollars and then sharply fell, long-term traders with leverage were often affected. On the other hand, short liquidation occurs when prices spike. Short liquidation spikes occurred at the end of April and the beginning of May, reaching $7 million to $14 million during the brief price recovery. This pattern shows how leveraged positions on both sides face forced exit during volatile fluctuations.

The price of Dogecoin has increased from nearly $0.05 to about $0.30 in the past month. The higher the volatility, the larger the liquidation volume. A rapid fall leads to prolonged liquidations, while a strong rise stimulates quick liquidations. Due to this tug-of-war among traders, the price of the token continues to fluctuate. At the time of writing, DOGE is trading at $0.2241.