Dogecoin Drops 4.97% Despite 20.57% Monthly Gains

Dogecoin (DOGE) recently experienced a 4.97% price decline, pushing the cryptocurrency toward lower price levels after testing a key resistance area. Despite this short-term weakness, DOGE has shown strong monthly performance with gains of 20.57%, highlighting a contrast between recent pullbacks and longer-term strength.

The current price action occurred at a historically important resistance level, which has triggered pullbacks on five previous occasions. Only once in the past has DOGE managed to hold above this resistance area, with the other four instances resulting in price retracements of varying degrees. This resistance level has acted as a consistent barrier for price advancement, with selling pressure increasing each time DOGE reached this area. The pattern suggests that traders view this level as an important profit-taking zone, with most attempts to break through resulting in temporary setbacks.

However, current market conditions may differ from previous instances. Several factors point to increased demand despite the recent price decline. Exchange netflow data indicates that traders purchased $16.91 million worth of DOGE recently, with this buying occurring as the cryptocurrency moved into what analysts call a demand zone. The netflow data also shows that traders moved their DOGE holdings from exchanges to private wallets, suggesting long-term holding intentions rather than short-term trading.

Open Interest Weighted Funding Rate data provides insight into futures market sentiment, with the metric rising to 0.0047%, indicating positive funding rates. Positive funding rates typically mean long positions outnumber short positions in the futures market, suggesting that traders expect price increases despite recent declines. The combination of spot buying and futures positioning creates a mixed technical picture, with short-term price action showing weakness while underlying demand appears strong.

Liquidation heatmap data reveals a cluster of potential liquidations above current price levels, with the zone containing approximately $1.4 million in liquidation potential. Historical patterns show that prices often move toward areas of high liquidation density, with these zones acting as magnets for short-term price movements. The liquidation cluster sits above DOGE’s current trading range, and if historical patterns repeat, this could provide upward pressure on the cryptocurrency’s price.

Current data shows that both spot and futures traders maintain interest in DOGE despite recent price weakness, with $16.91 million in recent buying activity and rising funding rates pointing to continued long-term accumulation. This suggests that while DOGE may face short-term challenges, the underlying demand and market sentiment remain positive, potentially supporting a recovery in the near future.