Dogecoin (DOGE) is once again at a critical juncture, with bears pushing its price perilously close to the $0.09436 level, where it faced rejection just a few weeks ago. As of the latest market data, DOGE is trading at $0.09466, a marginally higher but precarious position that could soon test the key support level at $0.0841.
Historically, Dogecoin has shown resilience whenever it has approached this crucial support level, often bouncing back and igniting bullish momentum. However, recent market analysis suggests a more somber outlook, as DOGE’s dominance in the memecoin space appears to be waning.
Whales Retreat As DOGE Faces Increased Competition
Dogecoin’s struggle to maintain its dominance in the memecoin market is becoming increasingly evident. Since March, the cryptocurrency has been unable to regain the $0.2 ceiling, a crucial psychological and technical barrier. The bullish trend that DOGE enjoyed in late July, when it tested the $0.143 resistance, seems like a distant memory as the memecoin now battles growing competition from newer entrants in the market.
Adding to DOGE’s woes is the declining interest among its user base. The number of active weekly users has plummeted from 30,000 to less than 10,000, highlighting a significant drop in engagement. This downturn has prompted analysts to examine the role of whales—those holding at least 0.1% of DOGE’s circulating supply—in shaping Dogecoin’s near-term trajectory.
Whale Inactivity Signals Potential Downward Spiral
According to data from IntoTheBlock, whale activity around Dogecoin has significantly decreased since early September. The outflows from major investors’ wallets have dropped dramatically, from 181.29 million DOGE to just 17.42 million—a staggering reduction of 80.7%. Similarly, daily inflows have also seen a sharp decline, from 229.49 million to 27.96 million DOGE.
This drastic reduction in whale activity has contributed to a 6% drop in DOGE’s price on the 1st of September, marking a concerning trend for the memecoin. The dwindling net flow of DOGE into whale wallets, now at just 10.54 million DOGE, further exacerbates the bearish outlook.
On-Chain Data Points to Continued Decline
AMBCrypto’s analysis of on-chain data reveals a troubling picture for Dogecoin’s short-term holders. The number of daily active addresses has sharply declined, from 50,000 to 22,000, mirroring the drop in whale activity. This is in stark contrast to the 22nd of July, when DOGE tested the $0.14 resistance, and transaction counts were significantly higher.
Adding to the bearish sentiment is the shift in Dogecoin’s Market Value to Realized Value (MVRV) ratio, which has turned negative. This indicates that many short-term holders are now in a loss position, potentially increasing selling pressure in the market.
Without a resurgence in whale activity or increased engagement from short-term traders, Dogecoin faces the very real possibility of breaking through its critical support level of $0.0841. Such a move could lead to a deeper price plunge, further eroding DOGE’s position in the increasingly competitive memecoin market.
As DOGE teeters on the edge, all eyes will be on whether it can muster a rebound or if the memecoin is set to slip further into bearish territory. For now, the signs are not promising.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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