Dogecoin Faces Challenges That May Limit Breakout Potential Despite Recent Whale Activity

  • Dogecoin faces multiple challenges that could prevent a breakout, despite recent whale activity.

  • Despite a key bounce, DOGE appears trapped in bearish trends that may hinder any significant price recovery.

  • “At press time, DOGE was trading at $0.2551,” as noted in our recent COINOTAG analysis.

Dogecoin shows signs of potential recovery, but bearish trends and declining network activity pose significant challenges ahead.

What’s happening on DOGE’s chart?

Looking at DOGE’s price action, the cryptocurrency bounced from a crucial support zone around $0.25 – a sign of potential accumulation after recent pullbacks. This level has been important for Dogecoin in the past, meaning it may play a pivotal role in any future rally.

However, DOGE seemed to be under pressure due to a descending channel formation, suggesting the market may still favor the bears. At press time, the Relative Strength Index’s (RSI) 37.93 reading indicated that Dogecoin was oversold and may be due for a rebound.

DOGE price action

Source: TradingView

Declining active addresses and transaction counts

On the network side, DOGE faced a concerning decline in daily active addresses and transaction counts. On 20 February, daily active addresses were 48,482 and the transaction count was 32,054.

This drop hinted at reduced network activity, which can be problematic for a cryptocurrency looking to sustain growth. Lower network activity often leads to decreased liquidity, causing higher volatility.

DOGE onchain stats

Source: Santiment

MVRV long/short difference – Where is the market sentiment heading?

Dogecoin’s MVRV (Market Value to Realized Value) long/short difference recently dropped to 11.52% too – a sign that many holders have been at a loss.

Such a negative sentiment could put downward pressure on DOGE, especially if traders decide to sell to avoid further losses. The bearish MVRV further hinted at a lack of conviction among market participants, which could contribute to sustained bouts of consolidation.

Dogecoin DOGE 15.38.12 20 Feb 2025

Source: Santiment

Dogecoin derivatives data – Is there a shift in market activity?

Dogecoin’s derivatives market painted a mixed picture too. While the 24-hour volume fell by 29.33% to $1.88 billion, Open Interest saw a modest hike of 1.09%. The volume drop pointed to a reduction in market participation – a sign of uncertainty among traders.

However, there has been a noticeable surge in Options volume, with the same climbing by 79.45% to suggest traders may be positioning themselves for potential volatility.

Screenshot 2025 02 20 153845

Source: Coinglass

Will DOGE break out or continue to struggle?

Despite recent signs of a potential bounce from a key support, DOGE faces multiple challenges that could impede a strong breakout.

At the time of writing, declining network activity, negative MVRV, and reduced derivatives market participation all seemed to point to cautious market sentiment. Therefore, while DOGE may see short-term rebounds, it remains highly uncertain whether it can break free from its current downtrend or not.

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