As a seasoned crypto investor with battle-scarred fingers from navigating through countless market fluctuations, I find myself standing at a crossroads with Dogecoin (DOGE). The recent rally, despite the negative on-chain metrics, is indeed intriguing, but it’s not enough to sway my cautious optimism.
The cost of Dogecoin has temporarily retreated from its breakout point as the overall cryptocurrency market experienced a dip due to unrest in the Middle East, causing uncertainty. Although Bitcoin is slowly regaining strength at $61,200, other digital currencies like Dogecoin are experiencing an uptrend. Nevertheless, some on-chain indicators hint at a possible 12% decline in the value of Dogecoin.
Dogecoin Price Is Rising Despite Negative Onchain Metrics
A glance at Dogecoin’s on-chain indicators reveals an altcoin battling to stay buoyant, as evidenced by data from Santiment which indicates a three-month low of -66% in the price-DAA (Daily Active Addresses) divergence. This price-DAA divergence signifies the correlation between a cryptocurrency’s value and its network activity.
As an analyst, I’ve noticed a striking 66% decline in network activity compared to the price, implying that the recent price surge might not be backed by a corresponding boost in user engagement. This discrepancy could be indicative of waning market confidence, which is often a bearish indicator for Dogecoin prices.
Additionally, it’s worth noting that the Network Value to Transactions (NVT) ratio reached a three-month peak of 397.32. This NVT measurement compares market capitalization, or network value, with transaction volume. When this ratio spikes significantly, particularly when prices are falling, it suggests that the network value is disproportionately higher than the transaction volume, implying increased network value relative to activity on the network.
It’s possible that Dogecoin’s current value might be inflated, leading to a potential decrease in price. Conversely, this could simply indicate that investors are keeping their Dogecoins instead of trading them.
Contrary to the unfavorable data seen on the blockchain, currently, Dogecoin (DOGE) is trading at $0.1081, marking a 2.6% rise over the past day. However, a closer examination of Dogecoin’s price trend suggests that this positive movement might not last for much longer.
DOGE Price Analysis: Brace for $0.095
The trend of DOGE‘s price seems to be leaning toward neutral to bearish. The chart suggests a possible turnaround after an apparent false move beyond the double bottom pattern’s neckline. Though it tried to break free, the price soon retreated below the 0.1150 resistance point. Presently, it hovers slightly above the 50-day exponential moving average (EMA), but the false move hints at a growing bearish feeling.
Key Support and Resistance Levels
- $0.0950 — A strong support level that aligns with the bottom of the potential drop zone. This is the critical level to watch, as a break below could lead to further downside.
- $0.1050 — Current short-term support, aligning with recent price action.
- $0.1150 — The previous neckline is now acting as resistance after the price failed to hold above it.
- $0.1250 — High during the fake out and another key resistance area if price attempts a recovery.
If the value of Dogecoin stabilizes around $0.0950, it could offer a promising long-term buying chance. But if Dogecoin’s price spikes and exceeds the resistance level (neckline), it would indicate market robustness, potentially causing the price to rebound towards $0.13 or more, thereby contradicting the bearish perspective.
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2024-10-04 10:10