Dogecoin Faces Bearish Pressure Despite On-Chain Signals Hinting at Accumulation
Dogecoin continued to face downward pressure as the broader cryptocurrency market attempted to regain its footing following a turbulent close to the previous week. Bitcoin, the market leader, has shown a repetitive cycle since May 23—sharp drops towards the end of the week, range-bound movement over the weekend, and modest recoveries on Mondays. Should this pattern persist, Dogecoin might see a similar bounce. However, at the time of writing, its price action remained firmly bearish.
Technical indicators show that DOGE is trading below the 78.6% Fibonacci retracement level, which was drawn from its early May rally. Moreover, price action revealed a swing market structure that continues to favor the bears. A notable liquidity pocket near the $0.17 level suggests the memecoin could revisit this support before any meaningful recovery takes place.
Despite the prevailing bearish sentiment, some on-chain indicators hint at a potential shift. The Network Value to Transactions Signal (NVTS)—an adjusted form of the classic NVT ratio that incorporates a 90-day moving average of transaction volume—currently sits below its May-June 2024 levels. This typically indicates undervaluation, offering a possible buying opportunity for long-term investors.
Another encouraging signal is the exchange net position change, which turned negative in early June. This trend, previously observed in January, often points to accumulation as more DOGE moves off exchanges. While this can reduce immediate selling pressure, it does not necessarily guarantee a price rally, as evidenced by Dogecoin’s downward trajectory over the past few months despite similar accumulation patterns.
In summary, while the fundamentals suggest Dogecoin might be undervalued, caution remains paramount. A retest of the $0.17 level appears likely in the short term, and traders should brace for continued volatility. For investors, this may present an opportunity to adopt strategies like dollar-cost averaging, especially if accumulation trends persist.
