Dogecoin, the Bitcoin of the memecoin world, is feeling slightly under the weather. As Sept. 2024 rolled in, investors were left questioning if it would be the right time to buy Dogecoins.
Bearish Outlook for DOGE in September 2024
Dogecoin’s outlook for September 2024 seems mostly bearish. The OI-Weighted Funding Rate showed a lot of volatility, with several dips into negative territory throughout August.
The negative funding rates indicate that traders are increasingly betting against DOGE, expecting prices to drop. If this trend continues, it could add more downward pressure on the price.
In addition, Dogecoin’s futures open interest has steadily declined since April. The drop means fewer traders are willing to take on new positions. When open interest falls, it often signals a lack of confidence in the market, leading to lower liquidity and potentially higher price swings, especially downward.
On-chain data also raises concerns. The MVRV Ratio (Z Score) has been sliding down, getting closer to levels where the market value matches the realized value. Such situations often increase the selling pressure, as holders near their break-even points might decide to sell to avoid losses. If this happens, it could push the DOGE USD pair even lower.
While these signs are mostly negative, there are a few potential bright spots. A Fed rate cut might inject some liquidity into the market, possibly giving DOGE a short-term boost. The upcoming US elections could also generate optimism, lifting the broader market, including DOGE.
However, these factors might not be strong enough to overcome the bearish sentiment. The declining confidence among retail investors, shown by reduced smaller wallet holdings, suggests that the market is leaning heavily toward bearish expectations. Even if a short-term rally happens due to external factors, it might be quickly overshadowed by the ongoing bearish trends.
Bearish Patterns Bear On Dogecoin Price
The DOGE USD pair is moving inside a descending channel pattern and is on its way toward testing the support trendline of the pattern
A drop to the pattern’s support line would mean a 25% drop from current levels. However, the channel is not the only bearish technical setup plaguing the Dogecoin token.
Another bearish setup, the ‘descending triangle pattern,‘ could add to the bearish cues against the DOGE USD pair.
Analysts recognize the descending triangle as a bearish continuation pattern. The configuration features a declining upper trendline that compresses price action into lower highs, while a flat lower trendline serves as consistent but weakening support.
The pattern signals intensifying selling pressure, resulting in progressively weaker rallies that struggle to breach resistance.
In this setup, traders estimate the potential downside by measuring the maximum height of the triangle. Pepe coin’s price recently broke out of this descending triangle, only for bulls to push it back within the pattern.
However, if the DOGE USD pair confirms the bearish setup, DOGE price could plummet by nearly 58%, reaching a target near $0.042.
A breakout below the pattern in the current market climate could hurt DOGE prices, potentially resulting in losses for the trading pair.
Hence, while there might be some brief positive movements from things like a Fed rate cut or election news, the overall picture looks challenging for DOGE. The combination of falling open interest, negative funding rates, a weakening MVRV ratio, and bearish technicals makes a downward trend more likely as Sept. progresses.
