Dogecoin (DOGE) has hit a three-year high of $0.43, maintaining a daily increase of 3%.
However, on-chain data shows that the price jump has led many long-term holders (LTHs) to take profits. If this trend continues, the memecoin risks losing much of its recent gains in the short term.
Long-term holders sell DOGE to profit
Dogecoin’s on-chain performance shows a decline in its Average Coin Age over the past week. According to Santiment, the indicator has decreased by 1% in seven days.
The Average Coin Age provides insight into how long owners held their cryptocurrencies before moving or selling them. When this indicator drops, it means that assets that have been held for a long time are being moved or traded more frequently.
This is often seen as a bearish signal indicating that long-term holders may be taking their profits.
Average Age of Dogecoin Coins. Source: Santiment
MVRV Index points to overvaluation of DOGE and possible selling pressure
Additionally, positive readings from DOGE’s market value to realized value (MVRV) ratio suggest that the memecoin’s price is currently overvalued. This may have encouraged its holders to want to sell for profit.
According to data from Santiment, DOGE’s current MVRV ratio is 232.36%. The MVRV ratio is a key metric used to analyze a cryptocurrency’s valuation relative to its historical price trends. It compares the market value (the current price of all coins in circulation) to the realized value (the price at which the coins last moved on the blockchain).
A positive MRVR ratio suggests that the market value is greater than the realized value. This indicates that the asset is overvalued. Historically, many have seen this as a signal to sell their holdings for profit.
Dogecoin MVRV Index. Source: Santiment
At 236.36%, DOGE’s MVRV ratio suggests that its current market value is 236% higher than its realized value. Therefore, if all of its holders sold, they would realize an average gain of 236%. Such a high MVRV indicates a prolonged period of price correction as more investors take profits.
Price Prediction: Will Holders Stop Selling?
Currently trading at $0.38, DOGE is just below the $0.39 resistance level. An increase in selling pressure could push the price towards its support at $0.31.
A failure to hold this level could trigger a steeper decline, pushing the price below the $0.30 mark and potentially towards $0.21. Such a move would further distance the memecoin from any upside beyond $0.47 and a return to $0.50, a level last seen in May 2021.
Dogecoin Price Analysis. Source: TradingView
However, if market sentiment turns positive and long-term holders (LTHs) hold their positions, increased demand could push the price beyond $0.47, bringing the $0.50 price zone back into reach.
The article Dogecoin (DOGE) in trouble: what to expect now? appeared first on BeInCrypto.
