Dogecoin falls 10% amid bearish sentiment, but analyst sees contrarian opportunity

As Dogecoin (DOGE) has fallen more than 10% in the past 24 hours, analyst Ali Martinez highlights a promising sign for investors amid increased negative sentiment towards the meme coin.

Since January 8 DOGE is trading at $0.3492, reflecting a 10.45% decline over the past 24 hours. Despite gaining 11.34% over the past week, the meme coin is experiencing a 22% decline over the past 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 grips Dogecoin

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

On January 5, Dogecoin’s social volume stood at 486, a notable decline from the highs of November 2024, when increased activity coincided with a rise in price. Weighted social sentiment has also turned negative, with a current reading of -0.596569. Martinez interpreted this as a sign of bearish market sentiment, with skepticism over Dogecoin’s upside potential remaining high.

Could this be a promising sign for Dogecoin investors?

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

#Dogecoin $DOGE weighted social sentiment is at -0.60, meaning the crowd remains very pessimistic about its upside potential. Maybe it’s a good time to go against the grain! pic.twitter.com/inpdSwGnSg

– Ali (@ali_charts) January 6, 2025

Derived data reflects mixed trends

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

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

Options trading indicators also presented a mixed picture. While options volume fell 21.16% to $175.83 million, options open interest increased significantly by 32.83% to $613.96 thousand.

Switch to short-term trading

Additionally, Dogecoin balance breakdown the data reveals a change in market behavior, with a notable increase in short-term speculative activity. Long-term holders, or “hodlers,” saw their balances decrease by 2.67%.

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