Dogecoin’s $500 million liquidation test as price aims for $0.2 rebound

Dogecoin is currently experiencing a period of volatility, with its price lingering just above crucial support levels. Amid a broader pullback in altcoins, DOGE has struggled to maintain its momentum after reaching a local high around $0.2. This downward trend has raised concerns about the strength of the memecoin in the current market environment compared to top cryptocurrencies like Bitcoin and Ethereum, which are consolidating.

Technical indicators such as Ichimoku and RSI show a lack of bullish momentum for Dogecoin. The next few days will be crucial in determining whether DOGE can stage a recovery or face a more significant correction. The asset risks losing most of its gains from the past month unless it can overcome key technical hurdles and absorb sizeable short liquidations, estimated to be over $500 million.

The critical zone for Dogecoin is currently at $0.165, where a significant amount of leveraged trades have been accumulated. This level serves as a potential trigger point for a short squeeze, which could push the price higher if it breaks below to force out shorts. A breakthrough could pave the way for a more robust rebound and a move towards $0.18, with a potential retest of $0.2 in sight.

From a technical standpoint, Dogecoin’s outlook remains bleak, with its failure to sustainably stay above the ascending trend line leading to continued downward pressure. The resistance from the Ichimoku cloud’s conversion line and the absence of a bullish crossover signal a weak technical position for DOGE. Additionally, the Stochastic RSI reversing from average levels indicates a growing bearish sentiment in the market.

If DOGE fails to hold support at $0.162, the price could experience further downside and prompt traders to reassess its long-term viability. Despite reaching $0.2 earlier this year, sustaining those levels and potentially moving higher by 2025 will require consistent upward momentum, clearing resistance levels, and attracting renewed investor interest. However, the current technical weaknesses and lack of strong bullish signals present significant challenges for Dogecoin’s future price action.

Overall, market conditions and sentiment will play a crucial role in determining whether Dogecoin can make a significant recovery and target higher price levels in the coming years. The outcome of the expected short squeeze, potential rebound from support levels, and broader market trends will be critical factors in shaping DOGE’s price trajectory moving forward. As of now, reaching the $0.5 mark in 2025 seems increasingly unlikely based on the current market data.