The Relative Strength Index (RSI) for Dogecoin is nearing overbought levels, signaling a potential price correction. However, analysts suggest that there’s still room for short-term growth. Meanwhile, Bonk’s RSI remains neutral, reflecting its recent downward trend. Increased speculative activity in derivatives for both meme coins is sending mixed signals. Amid these developments, analytical platform Santiment has issued a warning, suggesting that a correction could be imminent.
Santiment: Focus on Meme Coins Brings Caution
As reported by The Bit Journal, the crypto market has shown remarkable performance this week, with some meme coins experiencing significant rallies reminiscent of their past highs. One such coin is Dogecoin (DOGE). However, despite the recent surge, market analysts are warning of a possible reversal for these speculative assets.
Santiment, a market intelligence platform, has reported a noticeable increase in discussions surrounding meme coins like Dogecoin and Bonk (BONK). This spike in attention coincides with their price increases, drawing interest from traders. However, experts caution that when the market’s focus shifts to speculative assets like meme coins, corrections often follow. In this context, Santiment commented:
“When coins like Dogecoin and Bonk rise, we often see a sharp increase in meme coin discussions. Typically, when the focus shifts from first-layer protocols to more speculative assets out of greed, corrections follow. Unsurprisingly, market-wide declines are occurring today.”
Mixed Signals from Dogecoin Derivatives
Dogecoin’s RSI currently stands at 69.17, approaching the overbought threshold of 70, indicating a critical point where a price correction could be near. However, with the RSI slightly below 70, analysts believe there is still room for upward momentum. Market participants should closely monitor any signs of weakening momentum.
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The derivatives market for meme coins presents a complicated picture. Volume has dropped 28.05%, falling to $2.61 billion, while open interest has decreased by 4.12%. However, options trading has surged by 542.20%, and open interest in options has grown by 46.08%, signaling a rise in speculative activities. Long positions remain dominant on exchanges like Binance and OKX, reflecting a general bullish sentiment. However, significant liquidations of short positions have been observed, alongside a recent increase in long position liquidations within the last 12 hours.
📉 There was a major increase in memecoin discussions yesterday as coins like Dogecoin and Bonk were surging. Typically, markets correct when focus shifts away from layer 1’s and toward more speculative assets due to greed. Today, unsurprisingly, market-wide dips are occurring. pic.twitter.com/ACzHo7TsTY
— Santiment (@santimentfeed) October 17, 2024
Bearish Signs from Bonk Derivatives
Bonk also shows signs of cooling off, currently trading at $0.000023. The meme coin has dropped 9.59% in the last 24 hours, with trading volume reaching $263.41 million. Bonk’s RSI is at 55.12, suggesting a neutral to slightly bullish sentiment. While the price has decreased, momentum has not yet shifted into oversold territory, hinting that the recent downtrend may soon stabilize.
In the derivatives market, Bonk is showing more bearish tendencies. Volume has decreased by 21.58% to $98.63 million, and open interest has dropped by 11.90% to $9.33 million. The long/short ratio stands at 0.8932, indicating a slight downward bias. However, on Binance, the long/short ratio of 1.31 shows more optimism among traders on the platform. Notably, significant liquidations in long positions over the past 12 hours have increased the likelihood of a market correction.
For more updates on the state of meme coins like Dogecoin and Bonk, stay tuned to The Bit Journal.
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