Dogecoin, the iconic meme currency, has seen a meteoric rise this week, capturing the attention of crypto investors from all walks of life. However, this rise could well hit a ceiling. While some are wondering about the sale, others believe that caution is still required before deciding. Market indicators are signaling a possible slowdown, but in the volatile world of crypto, everything can change.
Dogecoin: a craze that could run out of steam
Dogecoin's recent rally should not mask the possibility of a trend reversal. Although it peaked at $0.1729, up almost 5% over 24 hours, this advance is largely based on widespread enthusiasm for the crypto market.
However, the DOGE daily price chart (1D) indicates a relative strength index (RSI) at 76.79, a level that signals an overbought zone.
Simply put, this value could indicate that Dogecoin is currently trading above its reasonable level, paving the way for a potential correction.
Additionally, falling trading volume could well accentuate this trend. This type of cooling, often seen as healthy for stabilizing the market, can also alert investors to possible running out of steam.
DOGE holders, having enjoyed quick gains, are now looking to take profits. With a market dominated by a strong correlation with Bitcoin, any fall of the giant could drag Dogecoin down in its wake, hence the need to remain vigilant.
DOGE whales: protection against the massive sell-off?
“Whales,” investors holding large amounts of Dogecoin, play a key role in stabilizing the cryptocurrency during times of high volatility.
Their recent activity reveals a massive accumulation strategy, aimed at strengthening Dogecoin in a hot market.
Unlike projects like Shiba Inu, Dogecoin does not incorporate a burn mechanism, which means that the available reserves remain constant. Whales, by relentlessly accumulating, create a barrier against a sudden drop in market supply.
Their presence, although stabilizing, does not guarantee total protection against fluctuations. Indeed, even the most fervent Dogecoin supporters know that whales can give in to the temptation to sell in the event of high volatility.
These players also monitor broader market trends and react to overall signals, such as Bitcoin movements and crypto market growth forecasts.
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