Gate.io Blog Dogecoin Faces Bearish Turn: Traders Increasingly Short the Meme Coin amid Market Shift

Dogecoin Faces Bearish Turn: Traders Increasingly Short the Meme Coin amid Market Shift

03 July 10:32

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![](https://gimg2.gateimg.com/image/article/17199735141692587449analysis.jpeg)
## [TL; DR]
As a result of the general negative crypto market sentiment the <a href="/price/dogecoin-doge" target="_blank" class="blog_inner_link">Dogecoin price</a> may continue to fall in coming weeks.

There is an equal chance that the Doge price may rise within the next few weeks.

Several factors like investor behavior and sentiment lead to the correlation of the <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin price</a> movement and that of altcoins.

## Introduction
Some of the best crypto performers for 2024 are meme coins that include <a href="/price/dogecoin-doge" target="_blank" class="blog_inner_link">Dogecoin</a> (DOGE), Floki Inu, <a href="/price/shiba-inu-shib" target="_blank" class="blog_inner_link">Shiba Inu</a>, [Book of Meme (BOME)](https://www.gate.io/how-to-buy/book-of-meme-bome "Book of Meme (BOME)") and BONK, among others. Most of these digital assets have been trending since the beginning of the year, despite some short-term fall backs. Nonetheless, recently these meme coins have turned bearish in line with the current crypto market trend. In this analysis we focus on Dogecoin's current bearish outlook. We will also assess the impact of the <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> price on the performance of the meme coin sector.

## The Shift in Dogecoin's Market Dynamics
Since the beginning of June Dogecoin, like many other cryptocurrencies, has been showing much bearish momentum. It has been able to rally for short periods such as one or two days only. Based [on the Dogecoin market sentiment](https://www.gate.io/blog_detail/4285/dogecoin-s-potential-uptrend-whales-lead-the-charge "on the Dogecoin market sentiment"), YG Crypto, a crypto analyst and enthusiast, has warned of a possible Doge price fall which may force its value to reach $0.09.

No doubt, the Doge price may continue to fall if the current crypto market instability and price volatility continue. Normally, such a situation creates a negative market sentiment that often leads to a market-wide bearish outlook which has an impact on the trading volumes of cryptocurrencies such as bitcoin and stablecoins.

[Bitcoininsider](https://www.bitcoininsider.org/article/253034/dogecoin-bearish-alert-analyst-warns-potential-slide-009-heres-why#:~:text=%E2%80%9CThe%20overall%20downward%20channel%20also,moving%20in%20an%20upward%20trajectory. "Bitcoininsider") has explored YG Crypto’s perception of Doge’s present and future price trajectory. According to YG Crypto, the Doge price direction depends on how it navigates its closet key support and resistance levels. For instance, if the Doge price falls below $0.11200 and $0.11500 (its nearest key support floors) it may drop further towards the $0.095 threshold.

YG Crypto [emphasized](https://www.bitcoininsider.org/article/253034/dogecoin-bearish-alert-analyst-warns-potential-slide-009-heres-why#:~:text=%E2%80%9CThe%20overall%20downward%20channel%20also,moving%20in%20an%20upward%20trajectory. "emphasized"): “The overall downward channel also suggests a bearish bias.” The following graph shows Dogecoin’s current and possible future price path.
![](https://gimg2.gateimg.com/image/article/17199736701.jpg)
Dogecoin’s Current and Possible Future Price Movements - Mitrade

As we note on the tip of <a href="/price/the-graph-grt" target="_blank" class="blog_inner_link">The Graph</a>, Doge is forming a horizontal price channel which represents a strong support area. That price action structure shows two possibilities, a breakout or a breakdown. Based on past cryptocurrency trends, a breakdown of the channel may see the Doge price heading towards $0.095. On the contrary, a breakout above $0.170 and $0.176 may push the price towards $0.22.

## Dogecoin Performance vs. the Rest of the Crypto of Market
The prices of most cryptocurrencies have been depressed since the 20 April bitcoin halving event. The situation became direr during June as prices of most cryptocurrencies kept on falling. Notably, most [meme coins have maintained a bearish outlook](https://www.coingecko.com/en/categories/meme-token "meme coins have maintained a bearish outlook") for the greater part of June. For example, during the third week of June the prices of most meme coins recorded losses of around 40%. Due to such a development most traders shunned trading memecoins. Instead, they started moving their funds to stablecoins and bitcoin. The crypto market is looking forward to a meme coin summer when most of these altcoins will record significant gains.

However, the general trend is that memecoins perform in a similar manner as most cryptocurrencies, especially when some <a href="/price/energy-web-ewt" target="_blank" class="blog_inner_link">ewt价格</a>. According to Lucy Hu, a senior analyst at Metalpha, one reason for the recent market pullback is the expectation of a Federal Reserve rate cut.

As per a [Coindesk publication Hu said](https://www.coindesk.com/markets/2024/06/20/dogecoin-traders-appear-to-short-token-as-meme-coin-frenzy-eases/#:~:text=%E2%80%9CWhen%20the%20price%20of%20Bitcoin,to%20be%20put%20on%20hold.%E2%80%9D "Coindesk publication Hu said"), "The expectation of one rate cut by the Fed has prompted investors to divert from risky assets to less risky ones, and DOGE may suffer as one of the largest meme coins on the market.”

Another crypto analyst, Neil Roarty, [cited by Coindesk said](https://www.coindesk.com/markets/2024/06/20/dogecoin-traders-appear-to-short-token-as-meme-coin-frenzy-eases/#:~:text=%E2%80%9CWhen%20the%20price%20of%20Bitcoin,to%20be%20put%20on%20hold.%E2%80%9D "cited by Coindesk said"), “When the price of Bitcoin falls, memecoins tend not only to follow, but to lose an even greater share of their value.”

## Coinalyze’s Analysis of Dogecoin’s Funding Rates
The Dogecoin’s funding rates indicate that the Dogecoin bearish momentum may continue. As per [Coinanalyze data](https://coinalyze.net/dogecoin/funding-rate/ "Coinanalyze data"), during the third week of June the Doge funding rate turned negative and reached -0.0027%, a level it last recorded in October 2023. The funding rate represents the differences between the perpetual futures value and the index price. A decrease in the funding rate shows an increase in the assets’ bearish pressure. To illustrate, when the funding rate turned negative, DOGE lost about 12%.

Another sign of Doge’s persistent bearishness was a decrease in its open interest. Its open interest or the number of unsettled futures contracts dropped from $800 million to $611 million within a 4-day period. A decrease in an asset’s open interest indicates a fall in the demand for the asset. In this case, the drop in DOGE open interest shows a fall in its demand as well as a decrease in the meme coin frenzy.

## Impact on the Meme Coin Sector: Relationship between Bitcoin's Price Movements and the Performance of Meme Coins
Most large capitalized memecoins like PEPE, SHIB, BONK and DOGE [mirror bitcoin’s price movements](https://www.gate.io/learn/articles/what-is-mirror/208 "mirror bitcoin’s price movements"). In other words, when the price of bitcoin is rising the values of the leading meme coins will also be increasing and vice versa. When bitcoin trends down, there may be a meme coin sector decline. Also, the Doge coin market sentiment may turn negative during such periods, inducing bearish pressure.

Several factors may lead to [correlations in the price of bitcoin altcoin](https://www.gate.io/article/28405 "correlations in the price of bitcoin altcoin"). One such factor is the presence of trading bots that synchronize the prices of leading altcoins with that of bitcoin. The broader crypto market sentiment may create a positive relationship between the prices of bitcoin and the [values of some leading altcoins like Doge and PEPE](https://www.gate.io/learn/articles/the-battle-for-memecoin-market-is-base-ready-to-take-on-solanas-memecoin-throne/3343 "values of some leading altcoins like Doge and PEPE"). The investor psychology and other crypto market dynamics tend to align the direction of the prices of leading cryptocurrencies like ETH, Bitcoin and major meme coins.

Primarily, the behaviour and sentiment of investors during periods of Bitcoin price volatility influence the performance of other cryptocurrencies. For instance, during bull markets the investor sentiment becomes overly positive which drives up the prices of bitcoin and most large capitalized crypto assets. On the contrary, during bear markets negative market sentiment leads to panic selling and a general fall in prices of most cryptocurrencies including meme coins.

## DOGE Futures vs. Bitcoin Futures - Meme Coin Traders Experiencing Losses
During the third week of June, DOGE futures traders suffered a huge loss as longs worth around $60 million were liquidated. In fact, the losses the Doge traders incurred were more than those of bitcoin traders. These losses occurred during a period when the value of bitcoin plummeted amid the over $2 billion whale bitcoin sales. The United States-listed bitcoin ETFs also experienced a huge net outflow amid the strengthening US dollar.

During the period, more long bets were liquidated than short bets on Doge. For example, during the 24-hour period from 17 to 18 June, only about $600,000 worth of bets against the Doge were liquidated versus the $60 million long bets. More significantly, the liquidations that occurred during that period were the highest since May 2021, showing the severity of the Doge's situation.

Read also: [Dogecoin Price Prediction & Forecast for 2024, 2025, 2030](https://www.gate.io/price-prediction/dogecoin-doge "Dogecoin Price Prediction & Forecast for 2024, 2025, 2030")

## Conclusion
In general, the [memecoin sector is declining as prices](https://www.gate.io/blog_detail/2663/decline-of-memecoin-minting-frenzy-pepe-prices-retreat "memecoin sector is declining as prices") of the leading crypto assets are nose-diving. However, other leading cryptocurrencies like bitcoin are facing a similar fate due to the broader negative crypto market sentiment. As things stand, the Doge price may fall further in the coming days or weeks before rebounding.

<div class="blog-details-info">
<div>Author:* Mashell C.*, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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TL_ DR

Introduction

The Shift in Dogecoin_s Market Dynamics

Dogecoin Performance vs. the Rest of the Crypto of Market

Coinalyze’s Analysis of Dogecoin’s Funding Rates

Impact on the Meme Coin Sector

DOGE Futures vs. Bitcoin Futures - Meme Coin Traders Experiencing Losses

Conclusion

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Dogecoin Faces Bearish Turn: Traders Increasingly Short the Meme Coin amid Market Shift

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