- During DOGE’s last major drop, a significant amount of liquidity of $380M+ was trapped at $0.50
- Total memecoin market cap is now far larger than in 2021, but the OI and daily volume have remained low
The memecoin sector rebounded on the charts over the last 24 hours. This recovery followed a cascade of liquidations on the back of the public spat between President Trump and Elon Musk.
Dogecoin [DOGE], the market’s biggest memecoin, has been leading the charge, with the same flashing early signals of a potential recovery at press time. However, the real question is – Does this rebound have any staying power?
Signals from Dogecoin’s metrics
At the time of writing, there seemed to be significant liquidity around the $0.50 zone. It was worth more than $380M DOGE, built up from the memecoin’s previous rally.
Normally, large groups of short positions are followed by significant rallies after the selling pressure wanes. Before DOGE went on its last surge, it followed a similar pattern by building up at the bottom and then soaring steeply higher.
At the time of writing, the chart underlined a potential mirror setup forming again.
Should the falling trend reverse itself, a breakout to the upper liquidity collection around $0.50 should develop.
What’s more, the DOGE/BTC pair is now approaching a key support zone – Eerily similar to the conditions seen ahead of DOGE’s legendary 2021 rally.
At the same time, the network for DOGE has stayed strong, as per latest data from Santiment. At press time, it boasted 7.97 million active addresses – More than USDT or XRP. With such a broader base, Dogecoin could handle the ups and downs of the market.
Bitcoin was in second place with 55.39M holders behind Ethereum with 148.39M. For its part, DOGE’s rising number of users could prepare it for another uptick on the charts.
And yet, if resistance levels are not broken, there might be a delay in price gains or a small drop in prices. Worth noting, however, that the outcome does not depend entirely on the level of activity and ease in trading.
Why could other memecoins follow?
The memecoin index has started to rebound after last month’s slide. Owing to this recovery, the total market value for memecoins is now already higher than it was in 2021.
And yet, the Open Interest for all memecoins has not been very high. It had a value of only $3.2 billion, with daily trading volumes of $12 billion. These figures are significantly lower than the same for Bitcoin or Ethereum.
The divergence between the prices of memecoins and Bitcoin suggested memecoins have not performed well recently.
Even so, this category of altcoins tends to climb when BTC rallies. In fact, major price swings are evidence that the sector could attract new speculation in the future.
Dogecoin and top memecoins may pick up again in the near future if there is a good shift in the crypto market.
At the same time, since volume and interest have been low, a strong hike might need extra enthusiasm from retail and institutional traders.
