Is Dogecoin's Recent Liquidity Sweep a Buy-the-Dip Catalyst or a False Dawn?

Dogecoin (DOGE) has been a rollercoaster of volatility in late 2025, with its recent liquidity sweep sparking heated debates among traders and investors. The question on everyone's mind: Is this a golden opportunity to "buy the dip," or a deceptive "false dawn" masking deeper structural weaknesses? To answer this, we must dissect the technical and on-chain signals emerging from the market's recent behavior.

Technical Breakdown and Liquidity Sweep: A Bearish Confirmation

DOGE's price action in late December 2025 confirmed a critical bearish shift. The asset fell below the $0.1310 support level-a key psychological and technical threshold-on elevated volume, with over 769.4 million tokens traded during the decline. This breakdown was not a minor pullback but a structural collapse, as the price now trades below major moving averages and key Fibonacci retracement levels according to technical analysis. The $0.1310–$0.1315 zone has since become immediate resistance, with any rallies likely to face aggressive selling pressure unless this area is convincingly reclaimed as market data shows.

The liquidity sweep itself was a telling event. DOGE briefly dipped below $0.1240 before recovering to $0.1260, but this rebound occurred on fading volume, signaling waning buyer participation according to on-chain analysis. Technical indicators like the RSI and MACD remain in bearish territory, with the price still trading below its 100-hour simple moving average according to market data. A 10-12% decline from its peak near $0.1531 has brought DOGE to $0.1372, with the 23.6% Fibonacci retracement level at $0.1410 already breached. The next critical support lies at $0.1250, and a sustained break below this could trigger further downward momentum according to technical analysis.

Order Book Fragility and On-Chain Metrics: A Thin Market

The liquidity sweep on November 12, 2025, exposed the fragility of DOGE's order book. A $0.1837–$0.1839 liquidity wall-holding over $10 million in value-was swiftly swept, triggering long liquidations and a sharp price reversal according to market reports. This event highlighted the thinness of the market, as professional liquidity providers had reduced their activity by 60% in late 2025, exacerbating price swings as data shows.

Broader on-chain metrics reinforce this narrative. The crypto market, including DOGE, faced a liquidity crisis in November 2025, with Bitcoin's 1% from mid-price depth dropping to $4.2 million (from $12 million in September) and Ethereum's falling to $2.8 million (from $8 million) according to market analysis. For DOGE, this thin liquidity means even modest selling pressure can trigger disproportionate price drops.

Signs of Accumulation and Potential Reversal

Despite the bearish structure, there are glimmers of hope. On-chain data reveals whale accumulation, with large wallets absorbing over 4.72 billion DOGE tokens in November 2025. CleanCore Solutions, a major institutional holder, owns over 710 million DOGE tokens valued at $180+ million, signaling long-term confidence according to institutional reports. Additionally, bullish divergence on the 4-hour RSI chart has emerged, with price forming lower lows while RSI creates higher lows-a potential reversal signal.

However, these bullish signs are conditional. A strong rebound above $0.1320 is needed to validate the RSI divergence according to technical analysis, and DOGE must reclaim and hold above $0.15 with conviction to reverse the bearish trend according to market data. The Fear & Greed Index, currently at 24 (extreme fear), suggests retail panic may be bottoming out according to market analysis, but institutional selling pressure remains a wildcard.

Conclusion: A Tenuous Balance Between Catalyst and Deception

Dogecoin's recent liquidity sweep is neither a clear buy-the-dip opportunity nor an unequivocal false dawn. The technical breakdowns and fragile order book paint a bearish picture, but on-chain accumulation and RSI divergence hint at potential short-term reversals. For now, the market is in a precarious equilibrium:

• Bullish Case: Whale accumulation and RSI divergence suggest a near-term rebound could materialize if DOGE breaks above $0.1320 according to technical analysis.
• Bearish Case: The price remains below key moving averages, with critical support at $0.1250 under threat according to market data.

Investors should approach this juncture with caution. A sustained move above $0.15 would be a necessary but not sufficient condition for a bullish reversal. Until then, DOGE's liquidity sweep remains a cautionary tale of market fragility-and a reminder that in crypto, hope and fear often trade in tandem.