Dogecoin Drops 14% In A Week, Bears Target Long Positions

Dogecoin [DOGE] has recently experienced a significant correction, dropping nearly 14% in less than a week after reaching a three-month high of $0.259 on May 11. This sharp decline has attracted the attention of traders who are looking for short-term opportunities in the high-volatility memecoin. The pullback has resulted in over $14.17 million in long liquidations, indicating that bears are currently in control and aggressively targeting overleveraged long positions. However, this correction may signal more than just weakness; it could be setting the stage for a classic bear trap.

The swift drawdown in DOGE's value can be attributed to a combination of macroeconomic headwinds and on-chain dynamics. At the macro level, risk capital is shifting back into stocks, causing crypto markets to enter a "pause and digest" mode. Additionally, Bitcoin [BTC] is currently stuck in a tight range, which is keeping DOGE on a short leash. This choppy setup is a classic scenario where volatility creates opportunities for traders. On May 14, DOGE's new address count surged to 311,811, a six-month high, indicating renewed retail interest despite the recent shakeout. This surge in new addresses suggests that the memecoin still has strong structural demand, reinforcing the idea that DOGE has plenty of bite despite the recent dip.

Market psychology plays a crucial role in this scenario. With such strong conviction, a retest of the $0.20 support level seems unlikely. Once macroeconomic fears subside, DOGE is poised to charge back toward $0.30, with the fear of missing out (FOMO) ready to ignite a fresh rally. The current dip could be seen as a golden entry point for investors, with $0.30 firmly back on their radar.

According to Coinglass, DOGE’s Open Interest (OI) surged to $3.70 billion after reclaiming the $0.25 mark, levels last seen in early January. However, less than a week later, OI bled out $1.05 billion, indicating a textbook deleveraging event that puts pressure on DOGE’s short-term supply. Despite this, Binance’s DOGE/USDT order book reveals 75.8% long account dominance, signaling that bulls are reloading rather than retreating. On the other hand, aggregated exchange data reflects 52.51% short dominance, a classic overcrowded bearish positioning. This skew mirrors broader market fears, but if sentiment snaps bullish, it sets up the perfect storm for a short squeeze, with DOGE primed to capitalize on a bear trap rebound. Consequently, Dogecoin’s next move could catch everyone off guard, turning recent shakeouts into serious shake-ups.