Dogecoin (DOGE), the Shiba Inu-themed memecoin, finds itself in a curious situation. While the number of holders and overall interest in DOGE surges, its price has experienced a significant drop in the past week.
This inconsistency reflects the broader volatility of the memecoin market, currently experiencing an influx of novice traders.
IntoTheBlock, a blockchain analytics firm, revealed a record number of addresses holding memecoins for less than a month in March.
This trend suggests a surge in new investors drawn to the memecoin craze. However, Dogecoin, despite leading the pack in terms of both traders and transactions, has seen its price tumble by over 20% in the last week.
DOGE Technical Signs Grim?
Technical indicators paint a concerning picture for DOGE’s immediate future. The Chaikin Money Flow (CMF), which measures buying and selling pressure, has dipped below zero, indicating an outflow of capital and a bearish sentiment.
Source: IntoTheBlock
Related Reading: XRP Battle Cry: Must Rally 70% To Reconquer $1 Peak After Market Turmoil
On the other hand, the On-Balance Volume (OBV), reflecting buying pressure over time, has also declined, further confirming a downtrend. This combination of falling prices and declining trading volume could exacerbate the drop and weaken DOGE’s support levels.
DOGE market cap currently at $24.6 billion. Chart: TradingView.com
Optimism Lingers For Memecoin
Meanwhile, cryptocurrency analyst Trader Mayne remains bullish on DOGE. He believes the memecoin could experience a significant price increase if it can hold its current support levels. However, Mayne’s prediction hinges on DOGE’s ability to defy the current bearish technical indicators.
Big spot here for Doge imo.
Bulls really want this area to hold, I think losing support here opens the door for a much larger correction.
RR skewed positively for longs, if we hold and can reclaim that old high the party continues. pic.twitter.com/HgSX60XuXv
— Mayne (@Tradermayne) April 3, 2024
The broader cryptocurrency market sentiment also plays a crucial role in influencing individual coin prices. If the overall market experiences a correction, it could drag DOGE down further. Additionally, regulatory scrutiny or negative news surrounding memecoins could dampen investor confidence and lead to a sell-off.
Dogecoin finds itself at a crossroads. While new investors are pouring in, fueled by the memecoin craze, the recent price drop and bearish technical indicators raise concerns about its short-term future.
The decisions of existing holders, the whims of social media, and the overall cryptocurrency market sentiment will all be crucial factors in determining whether DOGE can defy the odds and reclaim its former glory.
Featured image from Pexels, chart from TradingView
