Dogecoin sees 16% increase in open interest as bullish signs emerge

Dogecoin (DOGE) has been a focal point for traders and analysts, sparking discussions about a potential surge for the meme-based cryptocurrency. Analyst Ali Martinez recently pointed out a bullish market condition that could lead to a rebound in DOGE’s price. The cryptocurrency initially dropped towards the $0.13–$0.15 support zone before witnessing a substantial price increase. This upward movement was accompanied by a significant rise in derivatives data, with Open Interest climbing by 16% to surpass $2 billion and options volume spiking by 400%. These figures often signal big bets on upward price movements, with many investors now eyeing the $0.20 resistance level. A successful daily candle close above this mark could pave the way for DOGE to reach $0.27.

Despite the promising signs, the technical indicators present a conflicting picture for DOGE. The Stochastic RSI crossing above 80 suggests that the cryptocurrency is entering overbought territory. In previous instances, coins have remained in overbought conditions when buyers continue to drive prices higher. Traders are now keen on observing any significant volume behind a potential move above the descending trendline near $0.19. Without substantial trading activity, the rally could lose momentum or even reverse. Moreover, network activity reveals conflicting trends. Daily active addresses have decreased to 34,000, and transaction counts have plummeted to 15,000 as of July 3, a stark drop from the over 500,000 addresses and transactions recorded in late June. A decline in usage could impede the rally if retail investors do not step back into the market soon.

Nevertheless, the overall sentiment towards Dogecoin has improved compared to the previous week. The surge in options trading and the rise in Open Interest indicate a surge in speculative interest. A substantial influx of spot inflows, with whales injecting $8.20 million into spot wallets, signals a noteworthy shift following weeks of outflows. Historical patterns show that new whale purchases usually align with medium-term market rallies. On-chain metrics, like Dogecoin’s MVRV Z-score, have climbed back to 0.355 after hitting near-record lows in late June. This metric measures the average profit potential for DOGE holders. An increasing score indicates that fewer holders are experiencing losses, which could attract new investors. Nevertheless, MVRV is backward-looking and cannot predict whether prices will surpass key resistance levels.

At its current value of $0.16, DOGE is under close scrutiny to understand whether the bulls can keep the price above $0.15. If DOGE falls below $0.16 with high trading volumes, the optimistic outlook will likely wane swiftly. The prevailing charts are relaying a clear message: hold the line. Ensuring DOGE maintains its price above $0.16 might lay the groundwork for a potential 50% surge to $0.24. Conversely, a drop below $0.16 would likely temper the optimistic predictions. Observers are closely monitoring whether the bulls can defend the $0.15 level, a pivotal point that will dictate the future trajectory of DOGE’s price.