Dogecoin liquidations spike as DOGE hits $0.10: What will happen now?

Liquidation data indicates that long positions in the cryptocurrency market experienced significant losses, while short liquidations remained minimal.

Dogecoin's network activity is outpacing its price movement, suggesting a potential buying opportunity.

Traders holding long positions in Dogecoin faced liquidations exceeding $5 million between June 3rd and 4th. Conversely, short liquidations remained below $60,000. In the context of derivatives trading, longs are positions predicting price increases, while shorts anticipate price decreases.

Liquidations occur when an exchange involuntarily closes a trader's position due to market volatility, insufficient margin, or excessive leverage.

In Dogecoin's case, liquidations were triggered by recent price volatility. At the time of writing, DOGE is trading at $0.10, representing a 7.28% decline over the past 24 hours. However, this decline mirrors the broader market trend.

A liquidation heatmap identifies price levels where significant liquidations may occur. Analyzing data from Hyblock, we observe a concentration of liquidity around $0.12. If buying pressure intensifies, Dogecoin's price could move towards this level.

Despite the price decline, a positive price-DAA divergence suggests a potential buying opportunity for Dogecoin. DAA measures the number of daily active addresses on the blockchain. A divergence occurs when the price increase outpaces the increase in DAA, typically indicating a sell signal. However, the current price-DAA ratio of -58.32% suggests a trend reversal and an increase in network activity.

While the price may stabilize around $0.10, market participants may accumulate Dogecoin in anticipation of a potential rally towards $0.12.