Dogecoin value falls beneath a crucial support level following Dogeday’s sell-off reaction.

Dogecoin faced a significant setback on April 20, widely referred to as “Dogeday,” due to the unsuccessful test launch of SpaceX’s Starship rocket and a decline in the overall cryptocurrency market.

The SpaceX rocket, which displayed the Dogecoin mascot on its exterior, broke apart four minutes post-launch. Nevertheless, the company’s staff, including Elon Musk, celebrated the incident, expressing hope for another test in the upcoming months.

This event follows closely on the heels of Musk’s recent action when he briefly altered Twitter’s logo to feature the Dogecoin mascot.

The launch had generated substantial enthusiasm within the Dogecoin community. DogeDesigner, a graphic designer associated with the Dogecoin community, tweeted about the rocket launch with excitement.

The launch of the largest rocket on the planet, postponed for the sake of memes.
All Hail The Meme-lord!!!

— DogeDesigner (@cb_doge) April 18, 2023

However, Dogeday seems to have transformed into a sell-the-news scenario as the DOGE/USD pair fell by 11.88% from the day’s peak of $0.093 to $0.083.

DOGE open interest remains elevated

Despite the price decline, the open interest (OI) volume for Dogecoin futures contracts remains above the January 2023 high of $470 million, according to Coinglass data. Open Interest volume refers to the total number of open positions in the futures market.

Dogecoin’s OI volumes surged to an annual high of $580 million on April 4 after Twitter changed its logo to a Shiba Inu image, which also symbolizes Dogecoin.

The DOGE/USD pair demonstrated notable volatility following the logo alteration, climbing over 21% to reach a new annual high of $0.10 on April 4. However, both the price and OI volumes saw a significant drop after the social media platform reverted to its original blue bird logo. The logo change was in effect from April 4 to April 7.

A report from crypto analytics firm Kaiko highlighted,

“DOGE open interest has roughly doubled since Elon Musk took over Twitter last year, suggesting robust capital inflows.”

The OI volume for futures contracts decreased to $460 million following a wave of liquidations. However, the OI volumes rebounded to $533 million, coinciding with the excitement surrounding the rocket launch.

1-year futures open interest volume for Dogecoin. Source: Coinglass

While the DOGE price drop on April 19 triggered widespread liquidations totaling approximately $104 million, the OI volumes remain above the January 2023 highs, indicating that the token may face additional volatility.

The long-to-short ratio in the futures market reveals a stronger preference for short orders, serving as a contrarian indicator for potential upward movement.

Simultaneously, the funding rate for perpetual swap contracts has shifted to positive following the dip, suggesting the possibility of further declines due to a long squeeze.

DOGE funding rate for perpetual swap contracts. Source: coinglass

DOGE price analysis

The supply distribution among DOGE whale addresses experienced a surge, with addresses holding over $10 million in DOGE accumulating rapidly. However, these whales sold their DOGE immediately after Twitter reverted its logo.

These addresses have consistently engaged in similar accumulation and distribution patterns around Dogeday, heavily selling during the decline on Dogeday.

Addresses with more than $10 million (red) and $1 million (green) worth DOGE. Source: Coinmetrics

The DOGE/USD pair has fallen below the bullish parallel trend, raising concerns about potential further downside risk.

Related: Is Dogecoin coming to Twitter? Watch The Market Report

Based on the dimensions of the parallel channel, the DOGE/USD pair indicates a possible 15% decline from the current $0.083 level. A drop of this magnitude would align with the DOGE support level around $0.072.

DOGE/USD daily price chart. Source: TradingView

The unsuccessful launch of SpaceX’s Starship rocket on Dogeday, combined with the decline in Bitcoin’s price, negatively impacted DOGE’s value.

Despite this setback, the open interest volume for Dogecoin futures contracts remains high, indicating strong capital inflows. However, the recent price drop and increased selling activity by DOGE whales suggest further downside risks, with the DOGE/USD pair breaking below its bullish support.

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