Shift to Memecoins: Traders Favor Dogecoin as Bitcoin Stagnates
- Bitcoin’s price has stabilized above $67K, but traders are shifting focus to memecoins.
- Dogecoin’s Open Interest has been decreasing, indicating bearish sentiment.
Since May 23rd, Bitcoin’s price has remained stable above $67K, but traders are increasingly turning their attention to memecoins such as Dogecoin (DOGE). This shift comes in anticipation of a potential supply overhang from the Mt Gox exchange. Despite some gains in related tokens, Dogecoin’s immediate outlook remains uncertain.
According to QCP Capital, a crypto-trading firm based in Singapore, traders have shown increased interest in high-beta meme tokens like Shiba Inu (SHIB), Dogecoin (DOGE), and Pepe (PEPE). These tokens have seen notable double-digit gains, ranging from 10% to 20%, ranking high in terms of Open Interest (OI).
A recent analysis by Coinalyze indicated that PEPE and FLOKI experienced significant rises in OI over the past 24 hours. However, Dogecoin’s OI has continued to decline, falling about 5% at the time of writing. This decrease suggests a bearish sentiment among traders and could delay a strong short-term recovery for DOGE.
Open Interest Trends and Market Sentiment
Open Interest (OI) rates, which monitor the number of open futures contracts, are critical indicators of market sentiment. A rising OI typically signals bullish expectations, whereas a falling OI points to bearish sentiment. Since May 27th, Dogecoin’s OI has been trending downwards, dropping below $900 million. This decline highlights a lack of confidence in DOGE’s price potential among market participants.
Additionally, the Cumulative Volume Delta (CVD) for DOGE has been on a downtrend since May 27th, further indicating that sellers currently dominate the market. These indicators suggest that Dogecoin is facing significant selling pressure.
Dogecoin is currently trading at $0.16 with a slight 24-hour increase of 0.12%. This marks an impressive 185x increase from its all-time low of $0.0000869, according to CoinGecko data. DOGE recently saw a slight correction, trading at 0.00000235 after falling from 0.0000255. Key support for this pair is provided by the 200-day Exponential Moving Average (EMA) and an ascending trendline.
On the resistance front, Dogecoin’s upward movement is constrained by a confluence of the 20-day EMA and the 50-day EMA. The RSI (Relative Strength Index) is currently below the midline in the neutral zone, suggesting a bearish divergence.
Bitcoin Struggles Amid Volatility
Bitcoin has faced difficulties in establishing a clear bullish trend. The cryptocurrency surged to $72,000 last week, fueled by enthusiasm over the approval of Ethereum ETFs. However, this was followed by a correction, with Bitcoin’s price settling at $68,723, reflecting a 0.8% increase over the past 24 hours. The market’s volatility and a lack of investor confidence have contributed to this correction.
The crypto market is expected to experience heightened volatility as the US releases its inflation data on personal consumption expenditure (PCE). This data is critical as it will provide insights into the Federal Reserve’s future moves on interest rates. Economists are predicting the first interest rate cut to occur in September, although some are hoping for an earlier cut in June. The Fed aims to bring US inflation down to the target rate of 2%, a goal that remains challenging.
Bitcoin’s ability to break out of its current doldrums and surpass $70,000 hinges on these economic indicators. A successful breakout could trigger a fear of missing out (FOMO) among investors, potentially driving Bitcoin’s price towards $80,000.
