Dogecoin Price Faces Potential Decline Amid Market Recovery and Weak On-Chain Metrics
Dogecoin recently experienced a breakout reversal as the broader cryptocurrency market tumbled, partly due to uncertainty surrounding the Middle East conflict. While Bitcoin has shown a modest recovery, climbing to $61,200, altcoins like DOGE have also rallied. However, on-chain data suggests that Dogecoin’s price could be on the verge of a 12% correction.
Dogecoin Price Increases Despite Bearish On-Chain Signals
An analysis of Dogecoin’s on-chain metrics reveals that the altcoin is struggling to maintain momentum. Data from Santiment indicates that the price-DAA (Daily Active Addresses) divergence has plummeted to a three-month low of -66%. This metric tracks the correlation between a cryptocurrency’s price and its network activity, and a figure of -66% suggests that network activity has significantly declined despite the recent price increase. This divergence typically points to weakening market sentiment and is viewed as a bearish signal for Dogecoin.
In addition, the NVT (Network Value to Transactions) ratio has surged to a three-month high of 397.32. The NVT ratio measures the relationship between a cryptocurrency’s market capitalization (network value) and its transaction volume. A spike to such a high level, particularly while prices are down, suggests that Dogecoin may be overvalued relative to its transaction volume. This could indicate further downside potential, although it might also mean that investors are holding onto their DOGE rather than engaging in transactions.
Despite these negative indicators, Dogecoin’s current price sits at $0.1081, marking a 2.6% rise in the last 24 hours. However, a closer analysis of the price action suggests this upward momentum may be short-lived.
DOGE Price Analysis: Potential Drop to $0.095 Looms
The current outlook for DOGE remains neutral to bearish. The chart reveals a potential reversal following a false breakout above the neckline of a double-bottom pattern. The price initially attempted to break above the $0.1150 resistance level but quickly fell back below, signaling bearish sentiment.
DOGE is currently trading slightly above its 50-day exponential moving average (EMA), but the failed breakout is a warning sign of potential downside pressure.
Key Support and Resistance Levels
- $0.0950 – A crucial support level that aligns with the lower boundary of the potential drop zone. A breach of this level could open the door to further declines.
- $0.1050 – Current short-term support, consistent with recent price movements.
- $0.1150 – Former neckline turned resistance after the price failed to sustain above this level.
- $0.1250 – The peak during the false breakout, representing another key resistance point should the price attempt a recovery.
If DOGE can establish strong support at $0.0950, this could present a long-term buying opportunity. On the other hand, a surge above the neckline resistance would suggest renewed strength in the crypto market, with the potential for DOGE to retest $0.13 or higher, invalidating the bearish outlook.
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