Dogecoin surges 12% amid rising liquidity – Breakout or bull trap?

Momentum returns to Dogecoin [DOGE]  just as conflicting on-chain and derivatives signals begin to surface.

At press time, Dogecoin jumped more than 12% in a single day, breaking above a long‑standing descending trendline. This breakout came after weeks of tight price consolidation and steadily declining volatility.

Looking at the chart, DOGE pushed above key short-term technical levels while momentum indicators improved. However, the breakout occurred alongside a notable rise in exchange-held supply, complicating the bullish narrative.

So, is this breakout being supported by real demand, or is risk quietly building beneath the surface?

DOGE exchange supply begins to rise

Exchange data showed Dogecoin balances on Binance increased from 7.9 billion to 10.9 billion DOGE during 2025.

Tracking exchange supply, rising balances typically indicate more tokens becoming liquid and readily tradable. Historically, such moves raised concerns about potential sell-side pressure during rallies.

However, increased exchange balances did not automatically imply immediate selling. In some cases, they reflected preparation for volatility or liquidity provisioning during active trading periods.

The key question remained whether demand could continue absorbing this additional supply without triggering distribution.

Leverage skews heavily bullish

Derivatives positioning showed a strong imbalance toward the long side.

Futures data revealed approximately $850 million in long positions, compared with just $22 million in shorts. This skew suggested traders were positioning aggressively for higher prices.

Looking at leverage, such imbalances often amplify price moves in both directions. While bullish conviction appeared strong, leverage-heavy setups also increased liquidation risk if momentum stalled.

This made follow-through price action critical in validating the breakout.

DOGE price breaks as liquidity expands

Despite rising Exchange Supply, DOGE continued to trade higher, with price hovering around $0.132 on the 4-hour chart.

Looking at the chart, DOGE broke above its descending trendline as RSI rose to 72, at press time, signaling strong momentum.

Tracking momentum, the move occurred as MACD remained positive, with the MACD line above the signal line. This alignment suggested buyers retained short-term control during the breakout phase.

However, RSI near overbought territory often increases pullback risk, especially during supply-heavy conditions. Any loss of momentum could quickly shift the setup from absorption to distribution.

Is this demand absorbing the supply?

The divergence between exchange balances and price strength remained unresolved.

If DOGE maintained higher levels with sustained volume, the move could extend further. Failure to hold breakout levels, however, would likely expose leverage-heavy positioning.

For now, the setup reflected opportunity mixed with elevated risk.

Final Thoughts

• Dogecoin’s breakout coincided with rising leverage and exchange supply, creating a high-conviction but higher-risk setup.
• Sustained strength depended on demand continuing to absorb liquidity without triggering leverage-driven reversals.