On Monday, March 25, the price of Dogecoin (DOGE) shot up over $0.17, marking a 58% increase in just one month. This surge was fueled by thousands of new users joining the Dogecoin network, particularly after Elon Musk announced his involvement in payments licensing.
Now, as SHORT traders scramble to avoid potential losses exceeding $20 million, the big question is whether Dogecoin can sustain its upward momentum in the upcoming week.
Dogecoin’s Surge Driven by Elon Musk’s Announcement
Following a period of lackluster demand in mid-March, Dogecoin’s price took a significant upward turn on March 20. This shift came in response to the news of Elon Musk’s Twitter/X Payments LLC arm acquiring operational licenses in three US states. In just 24 hours after the announcement, DOGE price soared by 30%, climbing from $0.12 to $0.16, as the Dogecoin community responded positively to Musk’s bullish narrative once again.
As of March 25, Dogecoin has continued its upward momentum, surpassing the $0.17 mark, igniting hopes for a sustained uptrend in price. On-chain data indicates that not only are existing Dogecoin holders reacting positively, but also new entrants into the ecosystem are bolstering market demand.
Santiment’s Total Amount of Holders chart tracks the net growth in the number of new funded wallets created on the Dogecoin blockchain network. This serves as a proxy for measuring growth in user acquisition and the active investor base.
Dogecoin (DOGE) Total Amount of Holders vs. Price | March 2024 | Source: Santiment
Dogecoin’s Growing User Base Signals Bullish Sentiment
In March 2024, the number of funded wallets for Dogecoin surged by 70,000 addresses, reaching a total of 6.58 million active wallets by March 25. Notably, within the last four days, 10,000 new addresses have funded their wallets, following the acquisition of licenses by X Payments.
The increase in funded wallets not only signifies a rise in the user base but also serves as a bullish indicator of fresh capital flowing into the Dogecoin ecosystem.
The acquisition of licenses by X Payments has sparked optimism that Dogecoin could experience a surge in global adoption, particularly if Elon Musk fulfills the long-term proposition of integrating DOGE into Twitter/X.
Historical data further supports this optimism, as Dogecoin’s price action has demonstrated a close and positive correlation with changes in the number of funded wallets. Consequently, strategic traders will closely monitor future developments surrounding this event.
Dogecoin Faces Key Resistance Amidst Increasing Adoption
In the near term, if Dogecoin continues to witness an influx of newly-funded wallets, it could potentially propel the DOGE price towards the targeted $0.20 mark within the upcoming week.
However, analysis from Coinglass Liquidation map suggests that bears may establish a significant sell-wall around the $0.18 territory. Presently, SHORT traders are facing over $20 million in leveraged futures contracts, set to be liquidated if the Dogecoin price surpasses $0.18. To mitigate such substantial losses, bears might activate tight stop-loss orders in the following days, potentially slowing down the ascent of DOGE price.
Yet, if new entrants persist in injecting fresh capital into the Dogecoin ecosystem, the cryptocurrency could garner enough demand to surpass the looming sell-wall at $0.18 and potentially drive a rally above the $0.20 mark, in line with predictions.
Dogecoin (DOGE) price forecast, March 2024 | Source: Coinglass
However, there remains a risk of significant downward pressure if the activation of SHORT traders’ stop-loss orders triggers a pronounced bearish market reaction, leading to Dogecoin’s price dipping below $0.15. Nonetheless, this scenario appears less likely, given that bulls currently hold leveraged positions valued at over $65 million, which could be activated if the price falls below the $0.16 level.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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