As of 10:30 am ET, ultra-popular meme cryptocurrency Dogecoin (DOGE 2.20%) has surged 3.1% since 4 p.m. ET on Friday. This weekend move is one of the more notable among large-cap tokens, as many investors appear to be positioning their portfolios for a rebound after what could only be described as a horrid week in the digital assets space.
CRYPTO: DOGE
Key Data Points
Dogecoin declined more than 11% this past week, making this recent uptick one worth watching. Much of this negative momentum appears to be driven by macroeconomic sentiment, with the entire market also declining over this period.
Let's dive into what's driving this recovery rally in Dogecoin today, and whether this top meme token is one investors may want to consider as a speculative way to gain exposure to a reversion rally in the digital asset space right now.
Fundamentals and sentiment remain weak
Source: Getty Images.
Much of the bullish momentum we've seen play out in Dogecoin prices over the weekend appears to be waning. Over the past 24 hours, liquidation activity on Dogecoin's blockchain has exceeded $5 million, with approximately 70% ($3.6 million) of these perpetual futures liquidations targeting bullish on-chain trades.
Liquidations occur when perpetual futures contracts (derivatives tracking the price of Dogecoin) reach a certain level, resulting in the wiping out of positions. If more investor capital continues to be incinerated via these liquidations, it's hard to envision this rally continuing.
That said, some bulls do appear to be looking at more traditional purchases of Dogecoin, as various posts from the likes of Elon Musk (and Dogecoin's official X feed) have reaffirmed this token's meme stance in the media, for now.
I'll be closely monitoring how Dogecoin performs in the days and weeks to come, as I believe this more speculative token can provide additional context on how investors are thinking about taking risk-on or risk-off positions in this market. I'm not sure we're back to a "party on" mentality just yet, so I'll stay cautious when it comes to Dogecoin and other meme tokens for the time being.
