Dogecoin Price Prediction as ‘Excess Bullish Leverage’ Leads to Sharp Drop – Is the Market Resetting?
Dogecoin (DOGE) has pulled back sharply from the multi-month highs it hit on Monday at $0.1075 amid a flushing out of excessive bullish leverage that had built up during the cryptocurrency’s push higher in the past few weeks.
DOGE was last changing hands around $0.0940, down over 12% from Monday’s amid a wave of long position liquidations in the futures market.
As per coinglass.com, leveraged long futures positions worth over $9 million were liquidated on Monday, the largest amount in one day in at least three months.
The open interest-weighted funding rate paid to open a leveraged futures position has also dropped back from multi-month highs hit earlier in December and was last around 0.0233% versus Saturday’s highs of over 0.05%.
That shows that the latest punishing liquidation event for the bulls has dampened the demand to open fresh long futures positions, though the market’s bias still remains bullish with the funding rate still in positive territory.
Taken together, the latest major wipeout of long positions and drop in the funding rate suggests the Dogecoin market has swung back from a state of arguably excessive bullishness.
Whilst the latest calming of excessive bullishness has coincided with a sharp drop in the Dogecoin price, some may argue that the latest correction marks a positive reset for the market.
When overly-leveraged, weak-handed bulls are flushed out of the market amid short-term price dip, longer-term bulls with a higher tolerance for price volatility get a new opportunity to add to their positions.
These buyers form a stronger base for the DOGE price to see sustained upside, as they are much less likely to take profit or panic sell at the first sight of a short-term price decline.
With the broader market
