Dogecoin price falls, $15m liquidated: will it go back up?

Dogecoin price retreated for two consecutive days as sentiment in the crypto industry worsened.

Dogecoin (DOGE), the largest meme coin in the cryptocurrency market, fell by 6% on January 8, reaching a low of $0.3415, its lowest level in almost a week.

This decline occurred in a high-volume environment, with tokens worth $5.26 billion changing hands, up from Tuesday’s $3.3 billion. The surge in trading volume suggests that some investors have begun liquidating their positions.

Dogecoin’s drop triggered a significant increase in liquidations. Bullish positions worth $20 million were liquidated on Tuesday, followed by nearly $15 million on Wednesday. These liquidations marked the largest since December 19. When large liquidations occur, it often results in a sharp price drop as leveraged bullish trades are automatically closed by exchanges.

Further data shows that Dogecoin’s weighted funding rate remained positive, indicating reduced demand for long positions. This also reflects increased caution as cryptocurrency prices retreat amid soaring US bond yields. 

Odds of the Securities and Exchange Commission accepting a DOGE ETF this year remained low. According to Polymarket, these odds fell by 13% to 36% on Wednesday.

Still, some analysts expect Dogecoin’s price to bounce back. As we wrote earlier, Bitcoin, which often drives broader crypto market trends, remains in a strong bull market and has formed a bullish pennant pattern, which typically signals more gains ahead.

In a post on X, KrissPax noted that DOGE’s current price action mirrors previous patterns seen in 2023 and 2024. He pointed out that the coin rallied in November 2023, followed by a drop, a consolidation phase, and a subsequent recovery in 2024.

Dogecoin price analysis

Dogecoin’s price has pulled back over the past few weeks, falling from a December high of $0.4830 to $0.34. Despite the decline, it remains above the 38.2% Fibonacci retracement level and the 50-day and 100-day moving averages.

The Percentage Price Oscillator indicator has turned bullish, with its histogram staying above the zero line.

Given these factors, DOGE is likely to remain in this range before potentially rebounding to last year’s high of $0.4830 in the current quarter. Such a move would represent a 43.50% increase from the current level. However, a bearish alternative scenario could see the coin drop to $0.2630, the December 20 low.