What factors are driving the increase in Dogecoin price today?

The Dogecoin price has climbed alongside other top-ranking cryptocurrencies, indicating the return of risk-on sentiment after the global market rout on Aug. 5. Top reasons behind this bullish phase include signs of a resilient United States economy and whale accumulation. 

Why is DOGE price recoveing? 

A stronger-than-expected US jobless claims report on Aug. 8  helped ease recession fears sparked by last week’s disappointing employment data. In response, riskier assets like stocks and crypto extended their recoveries.

The Dogecoin

 price, for instance, jumped by approximately 12.50% to reach $0.108 on Aug. 9, compared to its lowest point a day prior. These gains align with the crypto market’s 11.50% jump in the same period.

The crypto market gains accompany rising odds of an interest rate cut at the next Federal Reserve meeting in September. According to CME data, the target rate probabilities for a 25-50 basis point (bps) rate cut in September now stand at 100%.

Lower interest rates typically boost demand for non-yielding assets like cryptocurrencies, which has helped attract DOGE buyers today.

DOGE whales accumulate

Dogecoin’s price gains further align with a rise in the DOGE supply held by its richest investors, also known as whales.

Data from Santiment shows that the DOGE supply held by entities with at least 1 billion coins (navy blue) has increased by almost 1.5% since the Aug. 5 crash. Similarly, the entities holding 1 million—10 million DOGE (brown) and 10 million—100 million DOGE (black) have also increased their coin supply in the same period.

This Dogecoin supply increase across the top whale cohorts coincides with a 35% rise in DOGE price, suggesting confidence among big players in a future price rise.

Short liquidations boost DOGE buying

Dogecoin’s gains today accompanies the higher liquidation of short positions versus longs.

As of Aug. 9, the DOGE futures market had witnessed $2.57 million of short liquidations compared to $774,310 in long liquidations. Closing a short position requires traders to buy back the asset to cover their positions, which adds buying pressure and pushes the price up.

Meanwhile, DOGE’s open interest and funding rates (into positive territory) have increased slightly in the past 24 hours, recovering after days of declines, as shown below.

The rise in open interest, which measures the total number of active derivative contracts, indicates that traders are opening new positions in DOGE. While the rising funding rates flipping back to positive indicates that demand for long positions is higher.

Related: Dogecoin Core reproducibility update ‘imminent’

Overall, the slight recovery in both open interest and positive funding rates points to a market where traders are regaining confidence and are increasingly willing to bet on short-term gains for DOGE/USD.

DOGE is bouncing from a strong support confluence

From a technical standpoint, the gains are part of a rebound that started after DOGE/USD tested a support confluence zone, comprised of its falling wedge’s lower trendline and a key accumulation level from July.

Furthermore, the daily relative strength index (RSI) dipping below 30, an “oversold” area, on Aug. 5, also suggests that sellers became exhausted.

An oversold RSI reflects negative market sentiment, often driven by fear or panic selling. Contrarian traders, who seek to capitalize on market overreactions, may see this as a chance to “buy low” and wait for a bounce.

As of Aug. 8, DOGE price was holding above its 0.786 Fibonacci retracement line of around $0.105, eyeing further upside moves toward the falling wedge’s upper trendline. This trendline coincides with the 0.618 Fib level at $0.127, up 20% from the current price levels. 

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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