Leading meme coin Dogecoin has experienced a modest rebound of 5%. This follows a brief drop to a September 2024 low during last week’s Black Friday sell-off.
As the broader crypto market seeks to recuperate from the sharp decline, DOGE’s price has shown a slight upward trend in recent days. However, on-chain data indicates that this recovery may not be strongly supported. This analysis explores the reasons behind this situation.
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Dogecoin Recovery May Be Short-Lived
Data from Glassnode reveals that new demand for DOGE is consistently shrinking, with fewer new addresses interacting with the asset daily since last Friday.
Yesterday, 18,251 unique addresses engaged in their first DOGE transaction on the network, reflecting a 40% decrease from the 30,534 active addresses that traded the meme coin during the Black Friday liquidation event.
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This decline suggests that DOGE’s 5% rebound may be more attributable to short-term market relief than to real investor demand, putting its price at risk for a near-term correction.
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Additionally, DOGE’s liveliness has steadily increased over the past few trading sessions, indicating that long-term holders (LTHs) perceive the price rebound as a chance to offload their holdings.
Glassnode reported that this metric closed at 0.708 on October 13.
The Liveliness metric tracks the movement of long-held or dormant tokens. A decline in its value usually suggests that LTHs are withdrawing their assets from exchanges, a generally bullish sign of accumulation.
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Conversely, an increase in liveliness, as seen with DOGE, suggests that more long-held coins are being moved or sold, indicating profit-taking by long-term holders.
For DOGE, the Liveliness readings imply that LTHs are seizing the current rebound to sell their assets. This further raises the chances of a near-term correction.
Is $0.095 Back on the Cards?
On the daily chart, DOGE continues to experience downward pressure, trading below its 20-day Exponential Moving Average (EMA). The 20-day EMA currently provides dynamic resistance at $0.249, while DOGE trades at approximately $0.199 as of this writing.
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The 20-day EMA measures an asset’s average price over the preceding 20 trading sessions, attributing more weight to recent prices. Remaining below this line indicates that bears are in control, tilting short-term sentiment downward.
In the absence of renewed buying interest or an increase in network activity, DOGE risks sliding towards the next support level at $0.167.
Failing to defend this price floor could lead to a deeper correction, potentially retesting its 13-month low of $0.095, recorded during the recent market decline.
However, should sentiment improve and bullish momentum re-emerge, DOGE could potentially break above $0.224. This would invalidate the bearish setup and open the pathway for a rally towards $0.264.
