Dogecoin (DOGE) Metric Falls to 4-Month Low – Is a Deeper Correction Ahead?

TL;DR

Dogecoin's network activity has reached its lowest level since October 2023, while its weekly price has dropped by 12%. Despite this negative trend, analysts remain optimistic about a potential rise if DOGE's valuation remains above $0.19.

Declining Network Activity

Dogecoin, the popular meme coin, has faced a steep decline recently. Its price has plunged 12% in a week, and its market capitalization has fallen below $35 billion.

Network activity, as pointed out by Ali Martinez, has also seen a significant drop, reaching its lowest point since October 2023. The analyst noted only 66 whale transactions and less than 60,000 active addresses per day.

Influence of Market Sentiment

This development may indicate reduced user engagement, potentially impacting investor confidence and reducing interest in Dogecoin. Consequently, it could trigger further downward pressure on the price.

However, dwindling network activity can also be influenced by broader market sentiment. The cryptocurrency sector has not been performing well, with Bitcoin and other major digital assets experiencing significant losses. The meme coin sector, in particular, has seen its total market capitalization fall below $70 billion.

Potential Price Reversal

Martinez has suggested that Dogecoin could remain bullish if its price remains above the $0.16-$0.19 support zone.

"If history repeats, as long as Dogecoin holds above $0.19, it could rally to the resistance trendline at $4," he predicted.

Another analyst, Cas Abbé, has drawn parallels between Dogecoin's current pattern and its historical surge to $0.70 in Q1-Q2 2021. Abbé believes that hype surrounding Elon Musk's new Department of Government Efficiency (D.O.G.E.) could fuel another rally.

Last month, the agency's website featured Dogecoin's logo, resulting in a price spike. It remains to be seen if future initiatives from Musk's department will positively impact Dogecoin's valuation.