Despite maintaining its position as the market leader, Dogecoin has suffered greatly from the market decline. It failed to reach a new all-time high in the run-up to the 2024-2025 market and collapsed massively as selling increased. And so far, it seems the bleeding hasn’t stopped, with cryptocurrency analyst MyCryptoParadise warning investors that the recent rebound could be a bust.
Why might the Dogecoin decline be temporary?
The analysis focuses on Dogecoin’s recovery and its failure to break any significant levels. Instead, the cryptocurrency analyst explains that the meme actually still respects a downward resistance trend line. This failure to breakout shows that DOGE still has significant structural weakness.
Another important thing to note is that the price is still holding within the 1-hour supply zone, as well as the demand block and the Fair Value Gap (FVG) zone. This means that the possibility of Dogecoin price moving down is still higher than the possibility of a sustainable recovery.
This also spreads in the size of the spread, as there has been a stability in the buying movement. The cryptocurrency analyst notes that this trend shows that there is a distribution happening for DOGE. Hence, it seems that the big players are using these rallies to actually sell their holdings. This means that the recovery is unlikely to last for long as the price dumps further.
Mapping DOGE price weakness
In addition to the points mentioned above, MyCryptoParadise also explains the confirmation of a major vulnerability that appeared on the Dogecoin chart. This was the fact that the meme coin was still below the upper overbought trigger line. In such a case, it indicates that supply is so strong that demand cannot fully absorb it.
If this weakness continues, the recovery could be stopped in its tracks. The first support for the downward move will be at $0.09, where buyers will have the opportunity to take their position. However, a break below this level would trigger a move towards $0.08030.
However, there is still a chance that the bulls will take control, and the analyst says this can only happen if Dogecoin price can break through the resistance level at $0.10875. To completely invalidate the bearish scenario, this breakout would need to occur with strong momentum, and this would lead to a continuation of the uptrend.
Featured image from Dall.E, chart from TradingView.com
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