Dogecoin Building for a Breakout? Analyst Spots Key Signals Resembling 2021 Setup

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Crypto analyst Joao Wedson has shared compelling, data-driven insights suggesting that Dogecoin (DOGE) may be poised for a significant breakout, mirroring conditions observed prior to its impressive 2021 surge.

In a tweet highlighting four key observations, Wedson refers to DOGE as the “king of memecoins,” implying that a surprise rally might be developing.

Liquidity Build-Up and Historical Pattern

The first signal centers on aggregated liquidation levels. According to Alphractal’s 500-day heatmap, a substantial amount of short-side liquidity, estimated at around $380 million, is currently concentrated near the $0.50 level. Historically, when short positions accumulate in this way, DOGE has entered accumulation phases, which have been followed by strong upward price movements.

DOGE/BTC Pair Approaching Support

Wedson also emphasizes the DOGE/BTC trading pair, which is approaching a long-term support level that previously preceded the 2021 breakout. The accompanying chart illustrates a recurring pattern of bounces along this consistent support trendline, with current price action suggesting the potential for a new reversal.

"The DOGE/BTC pair is nearing a critical support level, a setup strikingly similar to the one before the 2021 rally," Wedson points out.

Meme Index and Market Conditions Align

Further bullish context is provided by the Meme Index, which tracks the performance of the top 16 memecoins. This index is reportedly exhibiting early signs of recovery after a prolonged period of decline.

Despite this, overall open interest remains relatively low (around $3.2 billion), and daily trading volume is moderate ($12 billion). These indicators suggest that the market is not overheated, a condition that often precedes significant volatile moves.

Market Cap Has Grown, But Speculation Remains Tame

Wedson also notes that the total memecoin market capitalization is now significantly larger than it was in 2021, yet trader engagement remains subdued. This divergence could create a unique scenario where capital rotation flows back into DOGE, particularly if momentum shifts away from large-cap cryptocurrencies and towards risk-on assets.

“DOGE and other memecoins could still surprise in 2025,” Wedson concludes.

In Conclusion

With substantial liquidity built up, historical support levels holding firm, and overall market conditions reminiscent of the pre-2021 rally environment, Dogecoin may be quietly preparing for a major upward move. For observant traders, the meme coin market's current period of relative calm could be the prelude to the next significant breakout.