Dogecoin (DOGE) is showing signs of a potential breakout after regaining key technical levels and sustaining price action above $0.22. As of press time, DOGE is trading at $0.2238, reflecting a 3.37% gain over the past 24 hours. The critical $0.25 resistance zone, previously a support level, now stands as the next hurdle for bulls to overcome.
Bullish Technical Structure Confirmed
The recent breakout from a descending channel, followed by a successful retest, has confirmed a bullish technical structure for DOGE. Price action continues to respect the new support level of $0.22, indicating a steady foundation for upward momentum.
If bulls manage to push DOGE above $0.25 with strong volume confirmation, analysts predict a potential price rally toward $0.35, representing a significant gain in the near term. However, failure to reclaim $0.25 could trigger a short-term retracement due to overhead supply pressure.
Liquidation Data Signals Short Squeeze in Progress
On-chain liquidation data from May 18 reveals a pronounced liquidation imbalance, favoring long positions. Short liquidations totaled $387K, far exceeding the $65K in long liquidations. This suggests that a short squeeze is underway, which typically amplifies bullish momentum as short sellers are forced to buy back into the market.
MVRV Z-Score Indicates Undervalued Market
Dogecoin’s MVRV Z-score currently sits at 0.94, well below the 2.5 level that typically signals market overvaluation. This metric, which compares the market cap to realized cap, indicates that most DOGE holders are not sitting on large unrealized profits—reducing selling pressure and suggesting more upside potential.
Volatility Risks Arise from Stock-to-Flow Spike
DOGE’s Stock-to-Flow (S2F) ratio has surged to 99.53, pointing to slowed or stagnant supply growth, increasing the asset’s perceived scarcity. While this is typically bullish, such a sharp rise in S2F has historically preceded both rallies and corrections, introducing an element of volatility.
Mixed Signals from On-Chain and Derivatives Data
Network activity has recently shown a short-lived surge, with daily active addresses peaking above 500K earlier in May before dropping to 28.6 K. Likewise, daily transactions fell to 8.8K, reflecting a decline in organic user activity.
DOGE’s derivatives market also presents a mixed outlook. While total volume fell 22.05% to $3.46B, Open Interest (OI) rose by 2.7%, indicating that traders are maintaining positions. Additionally, Options OI jumped 10.61%, signaling growing interest in volatility plays or hedging strategies. However, Options Volume dropped 85.89%, suggesting a pause in intraday speculative activity.
Will DOGE Break Above $0.25?
Dogecoin’s short-term outlook remains bullish, bolstered by liquidation trends, healthy valuation metrics, and sustained derivative interest. However, low on-chain activity and the sharp spike in S2F ratio could introduce volatility, making it crucial for bulls to secure a decisive and high-volume breakout above $0.25 to validate any move toward the $0.35 target.
As the meme coin gains traction once again, all eyes are on DOGE’s next price move and whether it can defy market uncertainty to spark another round of meme-driven momentum.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments are volatile and risky. Always conduct your research before making any investment decisions.
