The number of new investors in Dogecoin (DOGE) has significantly increased in recent days, indicating the potential for prices to rise as high as the previous surge from September 23 to December 12. During that period, the price of DOGE rose from $0.10 to $0.47.
Could this surge of investors become a catalyst for a boom, or will the Meme Coin experience another downturn?
Investors are strengthening their positions in Dogecoin amidst historical support
Between mid-November and December, the total number of Dogecoin Holders decreased from 7.14 million to 6.80 million. Interestingly, this decline occurred at the same time the momentum of DOGE slowed, as the price fell from $0.47 to $0.39.
The price drop along with the decrease in the number of Holders indicates that profit-taking occurred strongly at that moment. However, on-chain data from Santiment, at this point, indicates that the situation has changed.
According to this analytics platform, the number of DOGE Holders has surged to 6.68 million. This means that there are 60K new Holders who have actively added the Meme Coin to their wallets in the past 10 days.
Growth in the number of Dogecoin Holders. Source: Santiment
The increase in the number of Holders is often seen as a positive sign, indicating that the cryptocurrency is attracting retail investment. Furthermore, this occurs amidst a backdrop of cryptocurrency whales continuing to play a significant role in directing the coin. If this trend continues, the price of DOGE may be poised to surpass $0.42.
The Market Value to Real Value ratio displays this argument. MVRV measures the ratio between the current price of the coin and the average price at which it was purchased. This index also assesses whether an asset is overvalued or undervalued.
An extremely high MVRV ratio indicates increased unrealized profits, suggesting that the cryptocurrency may be nearing a high valuation. Conversely, a low MVRV ratio indicates that the asset is undervalued, potentially providing a buying opportunity.
The Market Value to Real Value ratio of Dogecoin. Source: Santiment
At this moment, Dogecoin's 30-day MVRV ratio has reversed from the negative zone to 0.69%. The last time such a reversal occurred, the price jumped from $0.10 to $0.47, as mentioned earlier. Therefore, if history repeats the current pattern, DOGE could experience a strong price increase.
DOGE price forecast: The $1 target remains intact
Technically, the daily DOGE/USD chart shows the formation of a 'bull flag' pattern. A 'bull flag' is a pattern characterized by two bullish moves separated by a short period of consolidation.
As seen below, the pattern begins with a strong price surge almost vertically called the flagpole, driven by strong buying that catches sellers off guard. This is followed by a pullback forming the 'flag', represented by parallel upper and lower resistance levels.
During the pullback phase, the initial rally slows down due to profit-taking, and the price adjusts within a narrow range, creating lower highs and lower lows. Meanwhile, it appears that the price of Dogecoin is on track to continue its upward trend with a potential breakout ahead.
Daily price analysis of Dogecoin. Source: TradingView
Once confirmed, the price of DOGE could rise to $0.60. In a very optimistic scenario, the value of the Meme Coin could reach $1.
However, if the price falls below the lower resistance of this flag, the prediction may be invalidated. A decrease in the number of new Dogecoin Holders could also lead to a price drop. At that point, DOGE could fall to $0.33.
Follow me @TinTucBitcoin #tintucbitcoin #Write2Win #btc #binance #bitcoin
