Dogecoin Plunges 11%, But This On-Chain Cushion Could End Decline

Dogecoin Hovers Near Key Demand Zone Amidst Recent Decline

Over the past week, Dogecoin (DOGE) has experienced an 11% decline. However, this trend may be nearing its end, as DOGE currently rests above a significant on-chain support block.

Demand Zone and Investor Psychology

On-chain analysis reveals that DOGE is within a zone of high demand, where numerous investors have purchased their coins. These demand zones are determined by the average price at which various addresses first acquired their DOGE.

Major Demand Zone Near Current Price Level

Data from IntoTheBlock indicates that a sizable demand zone exists between $0.096 and $0.139. Approximately 409,330 addresses hold a total of 45 billion DOGE within this range.

The cost basis is a crucial level for most investors, influencing their reaction when the spot price retests it. A significant cluster of investors sharing a cost basis within a narrow range can result in a pronounced price reaction upon retest.

Impact of Demand Zone

The demand zone near the $0.115 average price has seen several addresses acquire DOGE, suggesting its retest could have a notable impact on the memecoin.

Historically, demand zones below the current price have served as support for cryptocurrencies. This is due to the tendency of investors to respond to the retesting of profitable positions by buying more or selling in fear of further losses.

Resistance and Future Outlook

IntoTheBlock notes that DOGE may face resistance around $0.16, where 20 billion DOGE are currently held at a loss.

It remains unclear whether the on-chain demand zone will prevent DOGE's decline if it falls to retest levels.

Price Performance

The past week has been challenging for DOGE investors, with a drop of approximately 11%. DOGE is currently trading around $0.142.