Dogecoin Plummets by 10% Amid Bearish Sentiment, But Analyst Sees Contrarian Opportunity

While Dogecoin (DOGE) has fallen by over 10% in the last 24 hours, analyst Ali Martinez highlights a promising sign for investors amid heightened negative sentiment toward the meme coin.

As of January 8, DOGE is trading at $0.3492, reflecting a 10.45% decrease in the last 24 hours. Despite gaining 11.34% over the past week, the meme coin shoulders a 22% decline over the last 30 days.

Following this downturn, Martinez shared data suggesting that reduced social media hype and negative market sentiment played a key role in this decline.

Bearish Sentiment Takes Hold of Dogecoin

Martinez shared data showing Dogecoin’s social metrics have weakened, with reduced hype and negative sentiment dominating market perceptions. Social volume, which tends to surge during price spikes, has specifically dropped. 

On January 5, Dogecoin’s social volume stood at 486, a notable decrease from peaks in November 2024, when heightened activity coincided with price rallies. Weighted social sentiment also turned negative, with a current reading of -0.596569. Martinez interpreted this as a sign of bearish market sentiment, with skepticism about Dogecoin’s upside potential remaining high.

Could it Be a Promising Sign for Dogecoin Investors?

Meanwhile, Martinez further mentions that this outlook could present an opportunity for investors to take an opposing stance. Contrarian investors typically act against the crowd by buying when others are selling, capitalizing on undervalued assets.

#Dogecoin $DOGE weighted social sentiment is at -0.60, which means the crowd remains very pessimistic about its upside potential. This might be a good time to be a contrarian! pic.twitter.com/inpdSwGnSg

— Ali (@ali_charts) January 6, 2025

Derivative Data Reflect Mixed Trends

Reinforcing this bearish narrative, derivative and futures market activity for Dogecoin reveal heightened trading volumes but reduced open interest. DOGE’s derivative trading volume surged by 90.88% to $11.29 billion, reflecting increased activity amid price volatility. 

However, open interest in derivatives dropped 12.51% to $3.60 billion, suggesting traders may have closed or liquidated positions during recent downturns.

Options trading metrics also presented a mixed picture. While options volume fell by 21.16%, settling at $175.83 million, options open interest rose significantly by 32.83% to $613.96K. 

Shift Toward Short-term Trading

Further, Dogecoin’s balance distribution data reveals a shift in market behavior, with a notable rise in short-term speculative activity. Long-term holders, or “hodlers,” saw their balances decline by 2.67%. 

Medium-term holders, categorized as “cruisers,” experienced a significant 11.81% decline in holdings. In contrast, traders holding DOGE for less than a month increased their activity by 107.45%, underscoring a shift toward short-term speculation.