3 Reasons Why Dogecoin (DOGE) Could Turn Bullish Again Soon

TL;DR

• Despite a severe price drop, some factors like increased whale activity suggest a DOGE reversal might be just around the corner.
• A potential approval of a spot Dogecoin ETF could also contribute to a possible rally in the near future.

The Bears to Step Back?

The past few weeks have been devastating for the cryptocurrency market, with countless leading digital assets witnessing double-digit price losses. The biggest meme coin – Dogecoin (DOGE) – is no exception, as its valuation has declined by almost 40% on a monthly scale, currently trading at around $0.16 (per CoinGecko’s data).

Contrary to the bearish landscape, though, some factors signal that the asset might switch to a bullish mode in the short term. The popular analyst Ali Martinez recently revealed that the investor sentiment around DOGE is “at its most negative in over a year.” 

“Historically, extreme fear has set the stage for major reversals. This could be a prime opportunity to be a contrarian,” he added.

Next on the list is the whales’ activity. Martinez claimed that large investors have purchased over 1.4 billion DOGE tokens in the past 24 hours.

The development reduces the circulating supply of the asset, potentially paving the way for a price rally (assuming demand doesn’t head south). Additionally, the whales’ accumulation signals confidence in the meme coin, which could encourage smaller players to hop on the bandwagon and inject fresh capital into the ecosystem. 

Lastly, we will focus on DOGE’s Relative Strength Index (RSI), which helps traders assess possible trend reversals. The technical analysis tool varies from 0 to 100, and readings below 30 typically suggest that Dogecoin is oversold and could be gearing up for a resurgence. As of this writing, the RSI stands around that particular bullish zone. 

Awaiting for ETF, too

Another element that may positively impact the price of Dogecoin is the potential approval of a spot DOGE exchange-traded fund (ETF) in the US. If greenlighted by the SEC, the product will enable investors to gain exposure to the meme coin without dealing with crypto exchanges or managing self-custody. This could bring more people into the ecosystem and trigger an upward pressure on the asset’s valuation.

The companies that have already displayed their intentions to introduce a DOGE ETF include Grayscale, Bitwise, and others. The securities regulator acknowledged some of the applications over the past few months.

According to Polymarket, the approval odds before the end of the year stand at around 62%.