Dogecoin Price Forecast: DOGE sustains bullish outlook, but surge in supply in profit poses risks

• Dogecoin edges higher on Friday, backed by increase in speculative demand.
• DOGE’s Open Interest hits $3.4 billion, while volume increases to $6.5 billion.
• Dogecoin’s supply in profit rises, adding to the risk of profit taking.

Dogecoin (DOGE) upholds a robust bullish outlook on Friday, as it extends recovery from support at $0.1881 by nearly 19% to trade at around $0.2232 at the time of writing. 

This uptick in price is reflected across the crypto market, buoyed by risk-on sentiment. The meme coin sector is edging higher, with the market capitalisation growing over 6% in the last 24 hours to approximately $77 billion.

A steady derivatives market affirms the surge in speculative demand. However, a surge in Dogecoin’s supply in profit suggests that investors may book early profits, dampening the uptrend.

Dogecoin steadies uptrend amid surge in Open Interest, supply in profit 

Interest in Dogecoin is expanding, according to CoinGlass derivatives market data. In the last 24 hours, Open Interest (OI), which refers to the notional value of outstanding futures or options contracts, has surged by 6.6% to $3.4 billion. A subsequent increase in the trading volume to $6.5 billion underscores the speculative demand and heightened market activity.

Dogecoin derivatives market data | Source: CoinGlass

Liquidations over the same period amounted to $9.9 million, with the lion’s share accounted for by short position holders at $8.2 million. On the other hand, long position holders faced $1.7 million in liquidations, underpinning the bullish outlook and the increase in Dogecoin price by approximately 4.4% in the past 24 hours.

Meanwhile, Glassnode data shows that Dogecoin’s supply in profit increased 38% in the last month, averaging at 105 billion DOGE at the time of writing. This surge poses a profit-taking risk if investors consider selling. 

Dogecoin Supply in Profit | Source: CoinGlass

Still, if Dogecoin sustains its technical bullish outlook and retail demand steadies as reflected by the derivatives market data, the uptrend could extend toward the July peak of $0.2871.

Technical outlook: DOGE bulls tighten grip

Dogecoin price holds significantly above the 50-day Exponential Moving Average (EMA), which has formed a confluence support with the 200-day EMA at around $0.2075 and the 100-day EMA at $0.2033. 

The Relative Strength Index (RSI) recovery above the midline bolsters the bullish outlook, indicating that buying pressure is steady. Meanwhile, the Moving Average Convergence Divergence (MACD) shows signs of confirming a buy signal on the daily chart if the blue line crosses above the red signal line. 

DOGE/USDT daily chart

Key areas of interest for traders are the tentative support levels at $0.2200, the confluence formed at around $0.2075 and the buyer congestion zone at around $0.1881, tested on Sunday. Critical milestones include the resistance at $0.2317, which was tested on May 27, the seller congestion at $0.2594, tested on May 11 and the July peak of $0.2871.