The leading memecoin Dogecoin (DOGE) has recently recorded increased activity as long-dormant coins begin to move again. This phenomenon comes after the price of DOGE fell 19% from the three-year peak of $0.48 on December 6.
Experts suggest this could be a positive sign for the market, as DOGE that was previously 'frozen' is being circulated again, boosting network activity and laying the groundwork for a potential recovery.
DOGE 'dormant' movement
An important on-chain metric drawing attention is the Mean Dollar Invested Age (MDIA) of Dogecoin – which has been continuously decreasing in recent weeks. MDIA measures the average age of all coins in the network based on purchase price, reflecting the length of time held in wallets.
When MDIA rises, it indicates that coins are being held longer, meaning network activity decreases, often signaling the market is in a consolidation phase. Conversely, when MDIA falls, it indicates that dormant coins are returning to circulation, reflecting increased network activity and often implying potential bullish trends.
According to data from Santiment, the MDIA of Dogecoin has decreased to a 370-day low, indicating that the coins that were previously held for a long time have become 'younger' by 31% over the past eight weeks as they continue to change hands.
Average investment age of Dogecoin | Source: Santiment
As MDIA trends downward as it is now, coins that have been inactive for a long time – typically held by long-term investors or large stakeholders – are starting to return to circulation. This increases network activity, which positively impacts the price.
"This is an important indicator in the lifecycle of any coin, helping to confirm that the bullish trend is likely to continue. Similarly, the bullish cycles of 2017 and 2021 only truly ended when the average age of the asset began to rise again," an on-chain data provider stated in a post on X.
Additionally, the positive funding rate of DOGE on exchanges also reinforces the bullish outlook. At the time of writing, the funding rate of DOGE is at 0.003%.
The funding rate is a periodic fee exchanged between perpetual futures traders to keep the contract price aligned with the price of the underlying asset. A positive funding rate indicates that Long traders (betting on price increases) are paying fees to Shorts, reflecting bullish sentiment and potential upward pressure in the future.
Funding rate of DOGE | Source: Santiment
Price prediction for DOGE: The three-year high is within reach
On the daily chart, DOGE trades above the Super Trend indicator, providing dynamic support at $0.34. This indicator measures the direction and overall strength of the price trend. It appears as a line on the chart, changing color based on the current trend: green indicates an uptrend, while red indicates a downtrend.
If this bullish trend continues, DOGE could recover to a three-year high of $0.48.
DOGE price chart | Source: TradingView
Conversely, the price of DOGE could fall to the support level indicated by the Super Trend at $0.34. If the bulls cannot maintain this support level, $0.31 will be the next level.
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