Unstable market: Dogecoin (DOGE) and Bitcoin Cash (BCH) face the risk of a deep fall.

Dogecoin (DOGE) and Bitcoin Cash (BCH) fell 3% and 8%, respectively, in Tuesday's trading, impacted by an increased sell-off in the futures market. In contrast to this decline, large-cap cryptocurrencies such as Bitcoin (BTC), Ether (ETH) and XRP have remained stable, even recording slight gains, suggesting that cash flows are tending to favor assets with higher stability during periods of volatility.

Dogecoin has the potential to prolong the downward trend

Selling pressure on Dogecoin appears to stem from the derivatives market, as the funding rate of DOGE is approaching negative territory — a signal indicating that pessimism is increasingly spreading among futures traders.

The funding rate is a periodic payment between the buyer and the seller to adjust the futures contract price closer to the spot price of the underlying asset. When this rate turns negative, it means that the short side is dominant, reflecting expectations that the price will continue to decline.

! doge-bch-giamFunding rate of DOGE | Source: CoinglassNotably, DOGE's open-(OI) contract has been flat since early February. This slowdown suggests that cash flows from leveraged traders are not as strong as they used to be. If the funding rate continues to deteriorate while the open contract does not increase, Dogecoin risks falling into a further bearish trend.

However, the spot market brings a certain bright spot. On-chain data shows that DOGE has continuously recorded a net outflow of funds from exchanges since the end of January — an indicator suggesting accumulation buying from long-term investors. In the past three months, there have only been 10 days when DOGE recorded a net inflow of funds, indicating that the demand to hold is still overwhelming the profit-taking pressure.

! doge-bch-giamDOGE net cash flow on the exchange | Source: CoinglassTechnically, DOGE is forming a months-long descending triangle pattern — this is the second time since the correction began in early December. To avoid falling into a deeper sell-off, DOGE needs to remain firmly above the critical support at $0.1428. If this level is penetrated, this meme coin can slide sharply towards the support zone near $0.0906.

Daily DOGE/USDT Chart | Source: TradingViewThe Relative Strength Index (RSI) is currently fluctuating below the neutral threshold, while the Stochastic Oscillator, although still above the average, is showing signs of weakening – an indication that selling pressure is on the rise.

Conversely, if DOGE can decisively break above the resistance line of the triangle pattern, the bearish scenario will be invalidated, opening up the opportunity for the price to rise to the $0.287 area.

Long-term Bitcoin Cash investors are worried

Investors holding Bitcoin Cash (BCH) for more than a year are showing concern as the futures market weakens.

BCH's funding rate fell to negative levels on Monday, hitting its lowest since early March, after the BCH price plunged 8% in just 24 hours. This development reflects an increasingly strong bearish trend in the coin's derivatives market. However, a deep negative funding rate is also often seen as a potential reversal signal, opening up opportunities for investors to "catch the bottom" when market sentiment falls into extreme pessimism.

! Funding rate of BCH | Source: CoinglassBCH's (OI) open contract has also remained low, having fallen 50% year-over-year. Notably, the index did not recover even during the bull run after the recent elections, indicating that BCH's attraction to investors is gradually declining.

In the spot market, cash flow data from exchanges showed that selling pressure was markedly increasing over the past week, with the only net drawdown taking place on Monday — mostly from investors taking advantage of "bottom-catching," according to data from Coinglass.

Meanwhile, on-chain indicators such as "Dormant Circulation" and "Spent Coins Age Band" from the Santiment platform indicate that a large portion of the current selling pressure is coming from long-term investors – those who have held BCH for over a year. They may be quickly cutting losses or realizing profits as the price of BCH approaches the cost basis.

! BCH Dormant Circulation and Spent Coins Age Band indicator | Source: SantimentOn the daily timeframe, Bitcoin Cash (BCH) is forming a descending triangle pattern — a technical signal that is usually biased toward a downtrend. The price is constantly rejected at the resistance line of the triangle, indicating that buying is gradually weakening. If BCH breaks out of the critical support zone between $255 and $222, selling pressure could intensify, pushing the price into a deeper decline.

! Daily BCH/USDT Chart | Source: TradingView Technical indicators such as RSI and Stochastic are currently hovering above neutral but show signs of leaning to the downside, reflecting fading bullish momentum.

However, in the opposite scenario, if BCH decisively breaks above the resistance line of the triangle pattern, the bearish signal will become invalid, opening up opportunities for the price to rise to the target area around the $428 mark.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should do thorough research before making any decisions. We are not responsible for your investment decisions.

• 21Shares filed for a Dogecoin ETF in the United States
• How does Elon Musk's departure from D.O.G.E. affect the price of DOGE?

SN_Nour

@media only screen and (min-width: 0px) and (min-height: 0px) { div[id^="wrapper-sevio-d89f58f5-7b63-40be-98c0-6b1fd62584fb"] { width:320px; height: 100px; } } @media only screen and (min-width: 728px) and (min-height: 0px) { div[id^="wrapper-sevio-d89f58f5-7b63-40be-98c0-6b1fd62584fb"] { width: 728px; height: 90px; } }