Dogecoin Strong On-chain Activity But DOGE Price Slides Further
DOGE could be facing more downside movement even thought we saw positive signs on-chain.
Key Takeaways
- Bullish trend attracts novices to memecoins, Dogecoin included.
- Most DOGE holders profit despite recent price drop.
- Possible accumulation as investors buy the dip, indicating optimism.
The year started with a bullish trend for memecoins, drawing many new traders. IntoTheBlock data highlights a peak in addresses holding memecoins for less than thirty days recently.
Dogecoin (DOGE) stands out among memecoins for its trading volume and number of transactions. However, its price has dropped 26% since its recent high of $0.22 on March 28, with its current trading value $0.17.
Dogecoin On-chain Data
Even with the failing price, the majority of DOGE holders are in profit. Slightly over 80%, or nearly five million, of holders are in the money. On the other hand, 13.39%, or nearly 400,000 addresses, are losing out.
This is a bullish sign but can also be interpreted as an ongoing profit-taking. While most investors bought Dogecoin at a lower price than the current one, they may become sellers and lock in some profits after DOGE’s recent decline.
The large transactions show a notable uptick from its recent low of 0 txs on March 27 to a high of 2,890 on the next day. This metric is now slightly lower but maintained around these high levels. It can be interpreted as high whale activity recorded on-chain, suggesting more volatility is ahead.
Looking at the NetFlow, we can see that these large transactions were most likely from exchanges to private wallets, as it fell into negative territory from its recent positive spike. On April 1, 650 million DOGE more was deposited than withdrawn from exchanges but now fell to a negative 307 million.
Accumulation is likely occurring as investors could view the price depreciation as a discount and have been using the opportunity to stack up on the token further.
Dogecoin (DOGE) Price Analysis
On March 5, DOGE reached a high of $0.20, meeting the 1.618 Fibonacci extension on the logarithmic daily chart. This peak marked the end of the third phase of an expansive five-wave sequence that started on October 13 of the prior year.
Following this high, DOGE fell to $0.12 by March 20 but swiftly regained over 20% the next day, March 21. This could indicate the end of the fourth wave’s corrective phase, especially since we saw a higher high of $0.22 on March 28.
However, the price made a downturn shortly, leaving the possibility of an immediate price surgery invalidated. Because of this, two scenarios are ahead, but both point to some near-term downtrend continuation. Either we have seen the completion of the five-wave pattern on March 28, or the wave 4 correction still hasn’t ended. The differentiator between these scenarios would be what happens at the horizontal support of $0.15. If the price finds support there, the next bounce could lead to a higher high of $0.30.
But if it continues moving past the level, the next likely zone DOGE could be eyeing would be at $0.10.
Disclaimers
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
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