Dogecoin (DOGE) is potentially at risk of losing critical support if the price falls from the ascending channel it has been in for the past 53 days. Although technical analysis is not an exact science, a daily close below $ 0.26 will likely invalidate the current move.
In addition to the Bitcoin-driven headwinds, weighing on the price of DOGE, this week, The meme token underwent a software update and users were asked to implement version 1.14.5. Two major security patches were involved: “Remote Code Execution on Dogecoin QT” (CVE-2021-3401) and “Exposure of Sensitive Information on Unix Platforms” (CVE-2019-15947).
The latest version finalized a new minimum fee recommendation, following the reduction of the relay and mining defaults from a previous version. Additional changes included Berkley DB and OpenSSL updates and SLIP44 support for the HD wallet diversion path.
Binance had problems after the update
Although users and developers did not experience any setbacks from the changes, Exchange Binance unexpectedly suspended all withdrawals from the Dogecoin network on November 11.
@michilumin, a core developer of Dogecoin, explained that Binance had pending transactions due to insufficient fees for a couple of years. Despite the recommendations of DOGE developers, the exchange was unable to redirect those dormant transactions to its own wallets.
Yes, we’re aware, with Binance. Situation is that Binance, when a dogecoin tx, even years ago, was insufficient fees; they just re-issued those transactions (Didn’t do RBF or anything), and assumed that the insufficient fee transactions would remain ‘stuck’ forever ….
– Michi Lumin (@michilumin) November 11, 2021
Yes, we are up to date, with Binance. The situation is that Binance, when a Dogecoin transaction, even years ago, was insufficient fees; they just reissued those transactions (they didn’t do RBF or anything), and they assumed that insufficient transaction fees would stay ‘stuck’ forever …
As update 1.14.5 successfully lowered fees, those pending transactions were finally approved, unbeknownst to Binance.
Interestingly, in February, Binance founder CZ raised concerns about the “centralization” and “abandonment” of Dogecoin.
Some pros / risks of #Doge.
Pros: Cool, fun, PR manager @elonmusk. Decentralized in the sense there are no “core team”. It’s abandoned.
– CZ Binance (@cz_binance) February 4, 2021
Some pros / risks of Doge.
Pros: Cool, funny, PR Elon Musk. Decentralized in the sense that there is no “core team.” Is abandoned.
1 address has 27% of all DOGEs.
The 20 largest addresses have more than 50% of all DOGEs
A bit “centralized” in that sense.
Futures markets could have driven the DOGE correction
Surely, the withdrawal restriction news from Binance could have been behind the recent price weakness to $ 0.25. Still, it is also possible that derivatives markets played a role because Dogecoin’s open interest was facing key resistance.
Unlike volume data, open interest in futures contracts provides a better picture of investors’ total risk exposure. Regardless of trading activity, which may momentarily falter after strong price movements, open interest will remain high as long as players keep their positions open.
See how the previous 4 attempts to break the $ 1 billion mark of open interest in futures resulted in major price corrections. Currently, the indicator stands at USD 850 million, so the imminent risk seems to have been left behind.
However, a positive price movement of 17% to $ 0.30 could see the DOGE derivatives metric once again hit the dreaded $ 1 billion of open interest. There is also the possibility that traders will reopen their leveraged positions and inflate open interest regardless of the price change.
Therefore, the classic chicken and egg problem presents itself to us: Was Binance’s problem the main cause of the recent dip below the 53-day rising channel, or was it destined to happen due to excessive leveraged positions?
In any case, DOGE traders should keep a close eye on that derivatives indicator to avoid any further surprises.
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