Is Dogecoin on the brink of a bearish retracement after its recent rally? On-chain data points to sustained demand, but there are also signs that profit-taking is becoming more likely.
Dogecoin (DOGE) has had its most bullish two weeks in months.
However, its stellar performance has pushed it deep into overbought territory, raising questions. Should traders take short-term profits or wait for further upside potential?
Dogecoin is up 41.95% from its previous low in October and was trading at $0.145 at the time of writing.
In other words, Dogecoin bulls have been very busy launching a decisive attack on the bears.
But are Dogecoin bulls about to take a break? Based on past performance, the king of meme coins was expected to face resistance above the $0.141 price range.
The bulls have broken above that price point, but are facing particular difficulty maintaining momentum above that price point over the past three days.
Source: TradingView
DOGE’s RSI is already in overbought territory, which also indicates that the bullish momentum is waning.
Similarly, the slight decline in MFI after being overbought suggests that some traders are starting to take profits.
Despite the increased resistance, bulls continued to show resilience, judging by their lack of rush to take profits.
This suggested that most Dogecoin holders expect the price to continue its bullish trajectory. At the time of writing, DOGE’s price trend was significantly lower than its year-to-date high.
Does Dogecoin induce profit-taking?
IntoTheBlock data pointed out that 80% of Dogecoin holders are in the money at current price levels.
Only 16% are underfunded, which means there is a lot of demand near the lower end.
The inflow of large holders recovered from 274.5 million DOGE on October 20 to 1.08 billion DOGE on October 21. This shows that there was strong bullish momentum.
Source: Into the Block
On the other hand, the outflow of large holders recovered from 52.23 million to 392.2 million during the same period. This confirms that selling pressure from the whale category has increased significantly.
However, significantly higher inflows into large holder accounts explain why prices are still maintaining their recent gains.
The Dogecoin exchange flow assessment also revealed that exchange outflows peaked at 422.56 million DOGE on October 21st. Foreign exchange inflows decreased slightly to 371.71 million DOGE.
Source: Into the Block
Realistic or not, the DOGE market cap in BTC terms is as follows:
However, AMBCrypto noted that inflows to the exchange spiked on October 18th and were significantly higher than outflows during the same session.
This was the first possible indication of increased selling pressure. But since then, foreign exchange outflows have again exceeded inflows.
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