Dogecoin (DOGE) may be on the verge of a notable price shift that could trigger a significant short squeeze, as suggested by analyst Ali Martinez (@ali_charts). He highlighted on January 27, via X, that “$766.45 million in short positions will be liquidated if Dogecoin DOGE rebounds to $0.35,” indicating that bearish traders are treading on dangerously thin ice.
Possible Massive Dogecoin Short Squeeze?
An examination of the latest liquidation heatmap from Coinglass reveals substantial short positions concentrated between approximately $0.339755 and $0.34368. Coinglass data indicates $464.8 million at $0.339755, $534.79 million at $0.34054, $503.97 million at $0.341325, $433.04 million at $0.34211, and $325.29 million at $0.34368, totaling around $2.26 billion in potential forced liquidations.
This figure highlights the potential scale of a short squeeze if DOGE manages to rise beyond that close range. Coinglass characterizes its heatmap as a tool “to anticipate where liquidation levels are likely to occur,” and has also stressed that “liquidations are integral to the cryptocurrency market” as they can lead to swift price fluctuations when traders with large leveraged positions are compelled to close out.
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Coinglass underlines the importance of identifying “high liquidity regions,” as they can act as attraction zones where significant participants, sometimes referred to as whales, take advantage to make large trades. Traders frequently capitalize on liquidation clusters at favorable prices, subsequently paving the way for sharp reversals. In the context of Dogecoin, this attraction zone currently exists just below $0.35.
Martinez’s assessment of DOGE is consistent with the broader technical overview, which indicates the token may be at a crucial turning point. Since December 8, when Dogecoin saw a temporary spike to $0.4834, the price movement has been characterized by a descending trendline. Although DOGE surpassed this line on January 15, 2025—suggesting a potential bullish transition—wider market fluctuations on January 26 rapidly pulled it back down.
This creates a situation where the descending line, currently around $0.335 to $0.34, acts as a significant obstacle. A successful breach of that zone could be crucial, particularly considering the high volume of shorts that Coinglass has identified just above it. If DOGE surges sufficiently to break through that level, traders with short positions may be compelled to cover quickly, resulting in a buying pressure wave that could swiftly amplify an upward movement.
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Simultaneously, DOGE is maintaining its position above the vital 0.382 Fibonacci retracement near $0.313, a support level that prevented further decline during the recent market sell-off. The next critical support lies deeper on the chart, close to $0.212 (0.236 Fibonacci retracement), where traders will monitor closely for any signs of weakening momentum.
On the upside, the 0.5 retracement at $0.394 represents a key pivot. A sustained rebound above that threshold could ignite greater bullish sentiment, with potential resistance re-emerging around the 0.476 to 0.592 range if Dogecoin can regain sufficient strength.
Featured image created with DALL.E, chart from TradingView.com