- Dogecoin sees a substantial drop in activity as transactions fall sharply.
- Bulls have a chance for a healthy entry point but demand remains low.
Dogecoin [DOGE] fans have been hoping for a recovery from the low range where it remained for the last two months. Unfortunately, the lack of demand recently led to more capitulation. But is there more hope for the grandfather of the memecoins?
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DOGE’s inability to secure enough demand for a rally is reflected in its transaction activity. According to IntoTheBlock’s latest Dogecoin analysis, the number of active transactions involving the memecoin tanked hard in the last four months. For perspective, DOGE averaged over 2.1 million daily transactions in June. That figure has since crashed to below 38,000 daily transactions.
Dogecoin’s 7-day average for daily transactions now sits at 37.3k— a sharp decline from its June high of over 2.1M and a secondary spike of 616k in July. Will we witness another surge in $DOGE activity soon? pic.twitter.com/RTJbAtIBJ2
— IntoTheBlock (@intotheblock) October 11, 2023
The impact of the massive dip in Dogecoin transactions was evident from its performance. Its $0.058 press time price tag represented a 6% dip in the last seven days. However, the price crash did end up retesting an important support level where the price now rests.
Source: tradingView
Dogecoin’s current support level has been tested and proven to be a strong price floor. This means there stood a significant probability that the memecoin could see a resurgence of demand around the same level. So is there active demand at the same level?
Can Dogecoin bulls capitalize on the discount?
The good news for the bulls is that the decline in Transaction Activity revealed that sell pressure has been subsiding. Furthermore, the Mean Coin has been steadily rising within the last four weeks. This confirmed that buyers were still holding on to their coins.
Source: Santiment
Despite this, the market still showed signs of low excitement. For example, one would think that the Investor Sentiment would be surging but that is not the case. Instead, the Weighted Sentiment (yellow metric) was still near its lower monthly range, indicating a lack of bullish confidence at its current level.
Other metrics also confirmed the current low demand situation, such as the Volume which indicated that the volume was still within its lower range for the month. This was because the ongoing economic factors do not necessarily inspire confidence among investors.
Source: Santiment
The latest downside has significantly affected investor profitability. At -30.6%, the Market Value to Realized Value (MVRV) confirmed that the majority of DOGE holders were now in the red. The last time that the MVRV ratio was this low was in October 2022, roughly 12 months ago.
Read about Dogecoin price prediction
The MVRV ratio suggested that the current level might be a worthy entry level since most traders will want to wait for recovery. However, it does not guarantee protection from more downside.
