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The rise of Dogecoin on the market that we witnessed recently delivered a clear sign: the market still has a lot of demand for risk, but the increased activity of whales suggests that a lot of profit-taking is present on the market, and the price of the meme asset might be under pressure.
However, apart from profit-taking, a large number of transactions could be tied to the additional funding of preexisting positions, which explains the reason behind the most recent breakout on the market.
đ¶ #Dogecoin has broken out with major whale transactions today, easily the highest of the year, going along with address activity spiking. The polarizing coin is up +40% since December 29th, and is back above $0.095 for the first time since December 10th. https://t.co/NjeLyhFKe2 pic.twitter.com/AWEOtqD1ax
â Santiment (@santimentfeed) January 31, 2023
Since December, Dogecoin is up 40% and reaching the strong psychological resistance level of $0.1, which it failed to break for the second time. Though the most recent price increase has been fueled by the rumor of the potential implementation of Dogecoin on Twitter as a payment service. This development brings the asset closer to the "golden cross," a technical indicator that could potentially propel its growth further despite a lack of fundamental support.
Since its growth has been driven purely by speculation rather than fundamentals, DOGE has experienced fluctuations in its value. Each time Elon Musk mentions cryptocurrency adoption on Twitter, there is a significant surge in transactions and purchases of DOGE, which quickly dissipates due to lack of consistent sources of funding for the asset.
If the rumor about the implementation of digital assets on Twitter is true and Elon Musk does, in fact, make Dogecoin usable on the platform, we might see a far stronger spike on the market that will bring DOGE to new highs we have not seen before.
At press time, DOGE is trading at $0.09 with a 3.5% price drop in the last 24 hours.