Dogecoin (DOGE) witnessed a setback on April 20, famously known as “Dogeday,” due to the failure of the test launch of SpaceX’s Starship rocket and a decline in the broader crypto market. The launch had built considerable excitement within the Dogecoin community as the rocket featured the Dogecoin mascot on its side. Still, the rocket disintegrated four minutes after its launch, leading to a showing of optimism for another test in the coming months by the company’s employees, including Elon Musk, who had changed Twitter’s logo to the Dogecoin mascot briefly.
However, Dogeday turned out to be a sell-the-news event, and the DOGE/USD pair lost 11.88% of the day’s high of $0.093 to drop to $0.083. Despite the drop in prices, the open interest (OI) volume for Dogecoin futures contracts is above the January 2023 high at $470 million, according to Coinglass data. OI volumes represent the number of open positions in the futures market.
Dogecoin’s OI volume spiked to a yearly peak of $580 million on April 4 after Twitter changed its logo to a Shiba Inu, the breed of dog used to represent Dogecoin. The DOGE/USD pair exhibited significant volatility following the logo change, rising over 21% to a new yearly peak of $0.10 on April 4. However, the price and OI volumes declined significantly after the social media platform returned to its original blue bird logo, and the logo change was only active between April 4 to April 7.
Despite DOGE’s recent price dip, the OI volumes are above the January 2023 highs, suggesting that the coin may experience more volatility. The long-to-short ratio of the futures market shows a greater inclination toward short orders, acting as a contrarian signal for further upside. At the same time, the funding rate for perpetual swap contracts has turned positive since the dip, raising the possibility of more downturn from a long squeeze.
The supply distribution of DOGE whale addresses registered a spike, with addresses holding more than $10 million in DOGE accumulating quickly. However, these whales sold their DOGE immediately after Twitter changed its logo back. These addresses repeated the same accumulation and distribution around Dogeday, selling heavily into the Dogeday decline.
The DOGE/USD pair has broken below the bullish parallel trend, raising concerns about further downside risk. Based on the size of the parallel channel, the DOGE/USD projects a 15% decline from the present $0.083 level. A drop below this magnitude will coincide with a DOGE support level of around $0.072.
The failed launch of SpaceX’s Starship rocket on Dogeday, coupled with the downturn in Bitcoin’s price, dealt a blow to DOGE’s price. Despite this setback, the open interest volume for Dogecoin futures contracts remains elevated, indicating robust capital inflows. However, the recent dip in prices and increased selling by DOGE whales suggest further downside risks, with the DOGE/USD pair breaking below its bullish support.
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