While the price of Dogecoin is trading slightly lower at $0.25 at the time of writing, one analyst thinks the price is at risk of losing potentially critical support should the price fall from the ascending channel traded in the past 53 days.
Is Dogecoin (DOGE) in danger of falling?
According to analyst Marcel Pechman Cryptocoin. com, Binance’s restriction on DOGE withdrawals could be behind the recent price weakness that caused DOGE to drop as low as $0.25. Still, the analyst points out that derivatives markets, where Dogecoin open positions are facing significant resistance, may also have played a role in this decline.
Unlike volume data, open interest provides a better picture of investors’ total risk exposure. Regardless of trading activity, which can be momentarily interrupted after strong price movements, the open position will remain high as long as players hold their positions. “Notice how the previous four attempts to break the $1 billion futures open interest mark have resulted in significant price corrections,” Pechman said. “Currently, the indicator stands at $850 million, so it looks like the near risk has passed.”
However, he points out that observing a 17 percent positive price move towards $0.30 could potentially push the DOGE derivatives metric back into the dreaded $1 billion open interest. It also points to the possibility of investors reopening leverage positions and inflating open positions regardless of price change.