- Dogecoin price witnesses intense buying pressure as it continues trending up.
- A breach of the previous high at $0.088 forecasts an upswing to $0.10
- Spike in social volume and realized market capitalization suggests that investors need to be wary.
Dogecoin price slid into consolidation after a 1,100% rally between January 28 and 29. But a recent spike in buying pressure allowed DOGE to resume its uptrend.
Dogecoin price prepares for another rally
DOGE has surged approximately 40% since it broke out of a bull flag pattern.
The technical formation forecasts a 90% target, that could see Dogecoin price climb another 30% to reach a new all-time high of $0.10.
DOGE/USDT 4-hour chart
Several celebrities including Elon Musk and Snoop Dog have endorsed Dogecoin causing FOMO among retail investors. Despite the high levels of speculation around this cryptocurrency, the bearish signs cannot be overlooked.
On-chain metric hint at overbought market conditions
In a recent report, The TIE's stated that the social engagement around Dogecoin has skyrocketed. Nearly 1 million tweets were sent out about DOGE surpassing Ethereum-related tweets by 200,000. The meteoric rise in social activity points to an increase in notoriety by the meme coin.
Usually, such a significant increase in social volume signals that the market has reached peak hype. This is when investors become irrationally confident about the coin's potential. Hence, a continuation of the uptrend is unsustainable and opens an opportunity for downward price action.
Dogecoin Social Metric Comparison chart
Coinmetrics' on-chain data shows dormant DOGE tokens from 1 to 5 years on the move. The resurgence of inactive coins suggests that long-term holders are getting ready to take advantage of the recent price action to book profits.
Dogecoin's realized market capitalization also spells trouble after experiencing a 550% increase in the last few weeks. Such market behavior indicates that most of the DOGE tokens were purchased recently by investors.
Realized market capitalization is a metric that considers the price at which the coin was last moved, which paints an accurate picture of the network's participants.
Doge Realized Market Capitalization chart
Therefore, a spike in selling pressure leading to a breakdown of the support at $0.075 could put a lot of these recent investments in the red. Based on IntoTheBlock's In/Out of the Money Around Price (IOMAP), roughly 50,000 addresses previously purchased 9.02 billion DOGE around this price level.
Hence, if this support buckles under selling pressure, it could trigger a sell-off invalidating Dogecoin's bullish thesis.
Dogecoin IOMAP chart
In such a case, Dogecoin price could drop to the next stable support at the $0.070 level where 37,000 addresses purchased 2.35 billion DOGE.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Bitcoin Weekly Forecast: This support level can define BTC’s fate
Bitcoin price has finished the first half of 2022 and things are not looking good. With record negative returns, BTC is likely to continue heading lower, especially if one particular support level is breached.
Key price levels to watch out as Ethereum enters Q3 in a negative posture
Ethereum (ETH) price has been clawing back losses at the start of the trading day, but attempts have been cut short quite quickly after Europe opened, and saw equities dragged to the downside.
XRP price primed for a big move as Ripple expands to New Zealand
Airwallex, a leading financial services platform, expanded its payment services to New Zealand. The fintech firm joined RippleNet in 2017 and offers services to businesses as a substitute for conventional banks.
DeFi traders must consider these resistance levels before trading Compound’s COMP price
COMP price is consolidating in a tight range, trying to establish a directional bias after a quick recovery rally. Depending on which camp wins, COMP is likely to head in that direction. However, judging by the market structure, a pullback seems likely.
Bitcoin: This support level can define BTC’s fate
Bitcoin price ended Q2 with a -56% return, which is the first in its 11-year history. On-chain metrics hint at bottom formation but technicals reveal more room to the downside. Bitcoin price has finished the first half of 2022 and things are not looking good. With record negative returns, BTC is likely to continue heading lower, especially if one particular support level is breached.