Dogecoin trader explains why shorting DOGE now makes sense

Dogecoin trader explains why shorting DOGE now makes sense

Independent market analyst to further short Dogecoin if Elon Musk plans to add DOGE payments on Twitter. Dogecoin is up almost 100% QT, hoping that Elon Musk will integrate the token into the Twitter platform. However, the potential for DOGE to continue its uptrend in the coming weeks is slim, argues a well-known market analyst.

Short Dogecoin hard?

Independent market analyst GCR said it is moderately short DOGE following the price’s recent reaction to a tweet by Musk. DOGE made a local high in November at $0.158. On the same day, Musk shared a photo of his pet Shiba Inu. Wears a t-shirt with the Twitter logo on it. GCR argues that the musky effect on Dogecoin’s potential Twitter integration is wearing off, meaning most gains are already priced. So, when the integration happens, it’s likely to become an oversized news item.

Overbought correction begins

Meanwhile, Dogecoin continued its corrective move on November 4, three days after hitting a high of $0.158. DOGE price fell to $0.115 in November 4, partly due to rumors that Twitter has shut down its crypto wallet development project. This brought the token’s net percentage correction from the local high of November 1 to almost 27%. Furthermore, the move down was due to its highly overbought status. The sentence has prompted Dogecoin price to retest its December 2021 – May 2022 support (defined by $0).

Range 108-$0.124; the red bar in the chart above) for a possible pullback. The coin can rally as high as $0.185, which coincides with its 0.236 Fib line if the rally takes place.

Conversely, a break below the $0.108-$0.124 range could see DOGE fall to $0.055 as the vital downside target, down 55% from current price levels.

DOGE on-chain data

Additionally, Dogecoin’s on-chain data shows a steady decline in key metrics from November, which could further increase selling pressure. For example, the Twitter-led DOGE price rally coincided with a sharp rise in whale transaction numbers (worth over $100,000), suggesting they supported the bullish move. But after November 1, fewer whales have interacted with the Dogecoin network. Meanwhile, the distribution of the Dogecoin supply to addresses with between 1000 and 10 million DOGE tokens has dropped along with the price.

In contrast, the address-driven supply of more than 10 million DOGE tokens has increased slightly. Additionally, addresses with less than 100 DOGES have risen, suggesting retail investors have offset some of the selling pressure from whales.

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