The cryptocurrency Dogecoin (DOGE) has once again captured the attention of market observers, with a scenario described as a “blood in the streets” moment by on-chain analytics company Santiment. Their most recent study posted on January 8 via X, highlights a series of negative MVRV (Market Value to Realized Value) ratios across various cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), and Dogecoin.
Santiment pointed out that average trading returns can indicate the right timing for buying or selling assets. Current on-chain metrics suggest that many cryptocurrencies are currently in oversold territory. When MVRV ratios are negative, it signifies that buying or adding to holdings is being done while others are already at a loss—a scenario where professional traders historically thrive, as noted by Santiment.
The data published by Santiment reveals the 30-day MVRV ratios for four major assets as of January 8. Bitcoin’s MVRV ratio stands at -3.73%, Ethereum at -7.71%, Cardano at -6.69%, and Dogecoin at -8.89%.
In simple terms, MVRV compares a cryptocurrency’s total market capitalization (its “Market Value”) with holders’ total cost basis (its “Realized Value”). A negative MVRV often indicates that the average holder is currently at a loss with their holdings.
For Dogecoin specifically, the -8.89% MVRV ratio suggests that investors who purchased DOGE in the last 30 days are experiencing significant unrealized losses on average. This contrasts with BTC’s lesser -3.73%, indicating that Dogecoin’s short-term holders are, on average, facing more losses compared to those holding Bitcoin. Ethereum (-7.71%) and Cardano (-6.69%) also have negative MVRV ratios, but their holders are slightly better off in the past month compared to Dogecoin.
Due to DOGE having the most negative MVRV among the mentioned assets, there is a potential for a stronger rebound if market conditions stabilize. However, this also signals higher risk if the broader crypto sentiment remains fragile. The analysis suggests that negative MVRV could offer a buying opportunity, although it does not guarantee an immediate upward movement.
Should You Buy or Sell Dogecoin Now?
Santiment’s evaluation underlines how macroeconomic factors have contributed to the recent downturn in the crypto market. Following a surge in US bond yields on January 7, driven by strong economic indicators, market concerns grew. The focus was on the higher-than-expected ISM Prices Paid Index, signaling potential inflation, along with unexpected growth in JOLTS job openings data. This led investors to adopt risk-off strategies, impacting cryptocurrencies across the board.
Santiment’s chart indicates further market decline, suggesting optimal buying opportunities for most assets in the short to medium term. Dogecoin’s current downtrend aligns with this broader market trend. Continued attention on yields and inflation threats might result in cautious capital flow towards risk assets. Conversely, any indication of subdued inflation or a less strict Federal Reserve approach could spark a rally, potentially amplified by negative MVRV ratios for all assets.
Despite these signals, navigating the current trading environment is complex. While Santiment’s metrics indicate favorable conditions for accumulating assets, particularly with DOGE at -8.89% MVRV, uncertain macro data—from Treasury yields to inflation figures—might impede immediate recovery.
As of now, Santiment’s outlook remains cautious: “Do not expect these signals of opportunity zones to immediately drive a turnaround. However, the chances are pointing towards a potential short to mid-term recovery for crypto assets, unless external economic or geopolitical factors intervene.”
At the time of writing, DOGE is valued at $0.33.
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