Dogecoin rises 12% amid increased liquidity: Breakout or pump trap?

Revival momentum for Dogecoin (DOGE) amid mixed signals from on-chain data and derivatives markets

As of the latest update, Dogecoin has surged over 12% in a single day, breaking through a long-term downtrend that has persisted for some time. This breakout comes after weeks of DOGE trading sideways within a narrow range and declining volatility.

Technical chart analysis indicates that DOGE has surpassed key short-term resistance levels, and momentum indicators also show significant improvement. However, this price increase is accompanied by a sharp rise in DOGE supply on exchanges, adding complexity to the bullish outlook.

Is this breakout truly driven by genuine demand, or are risks quietly accumulating behind the scenes?

Increasing DOGE supply on exchanges

According to exchange data, Dogecoin holdings on Binance increased from 7.9 billion to 10.9 billion DOGE in 2025.

Typically, an increase in supply on exchanges suggests that more tokens are becoming liquid, ready to be traded or sold. Market history has shown that such movements can increase selling pressure during bullish phases.

Source: XD Nonetheless, rising supply does not necessarily mean immediate selling. In many cases, it may be preparation for strong volatility or providing liquidity during active trading sessions.

The big question is: Is buying demand strong enough to absorb this additional supply without causing distribution pressure?

Leverage heavily tilted towards bullish positions

Derivatives market data shows a clear imbalance favoring long positions.

DOGE futures contracts record a total long position value of up to $850 million, while short positions are only around $22 million. This indicates traders have high expectations for an upward trend.

Source: X However, such leverage disparities often amplify price volatility, both upward and downward. While confidence in the bullish trend is dominant, high leverage setups also carry the risk of strong liquidations if price momentum weakens.

Therefore, the next price movement will be crucial in confirming the sustainability of this breakout.

DOGE price rises amid expanding liquidity

Despite the increase in DOGE supply on exchanges, the price continues its upward trend, currently oscillating around $0.132 on the 4-hour chart.

Technical analysis shows DOGE has broken the downtrend line as the RSI indicator rises to 72, reflecting strong buying momentum.

Source: TradingView The bullish momentum is further supported by the MACD indicator remaining in positive territory, with the MACD line above the signal line. This suggests that buying pressure is dominating the market in the short term.

However, the RSI approaching overbought levels also indicates a high risk of correction, especially with the supply on exchanges being substantial. If momentum weakens, the market could shift from absorption to distribution.

Is genuine demand absorbing the supply?

The discrepancy between DOGE holdings on exchanges and price strength remains unresolved.

If DOGE continues to maintain high prices with stable trading volume, the upward trend could persist. Conversely, if key breakout levels are not sustained, high leverage positions will face significant risks.

Currently, the DOGE market presents both opportunities and risks, requiring investors to exercise caution and closely monitor upcoming developments.

Mr. Giáo