Dogecoin (DOGE) has demonstrated a recurring cyclical pattern in the market, particularly in its market value versus actual value (MVRV) ratio.
When prices approach historical highs, the MVRV ratio often spikes, indicating overvaluation, followed by a retracement. This pattern has occurred multiple times in history, especially during price fluctuations in early 2014, late 2017, and early 2021.
MVRV Ratio's Periodic Fluctuations
Historical peaks in the MVRV ratio typically mark the speculative phase of the Dogecoin market, after which prices often decline sharply, entering a retracement phase.
After this, the market entered a consolidation phase, laying the foundation for the next upward trend. Currently, Dogecoin's MVRV ratio is again approaching these higher levels, indicating that the market may be repeating this cyclical pattern.
Current Market Conditions and Resistance Levels
Dogecoin is currently in a correction phase, repeatedly testing the resistance level around $0.49. Although there have been several attempts to break through, none have been successful.
Each breakout has been followed by a retracement, confirming the strength of this resistance level. The current price has pulled back to around $0.36, forming a strong demand zone, showing signs of rebound after touching it, indicating accumulation activity.
Technical Indicators and Short-Term Trends
The MACD indicator shows that Dogecoin's momentum is weakening, with prices converging below the baseline. If this pattern continues, DOGE may break below the $0.36 demand zone, followed by a potential rebound to continue its upward trajectory. Historically, DOGE tends to rebound after hitting lows, forming upward momentum.
Analysis shows that most Dogecoin holders are currently in profit. According to IntoTheBlock data, about 74.19% of DOGE holders are in 'in-the-money' status, meaning they have mostly been able to benefit from the price increase.
In contrast, only 22.20% of holders are in 'out-of-the-money' status, indicating that there are fewer holders at a loss. Therefore, Dogecoin may be able to maintain or enhance its profitability in future volatility.
The Periodic Fluctuations of Altcoins and DOGE's Performance
The performance of Dogecoin and other altcoins typically exhibits significant volatility peaks compared to Bitcoin, particularly during the '3rd wave' and '5th wave', which usually sees the emergence of altcoin seasons, attracting capital inflows and market interest.
Since the beginning of 2020, the volatility of altcoins relative to Bitcoin has formed a wedge pattern, which has recently been broken, signaling that an altcoin season may be imminent.
Historically, Dogecoin may not remain in the correction phase for long, but instead break through current highs at some point, potentially soaring to new highs. As market volatility increases, Dogecoin may continue to attract investor attention and could form the momentum for the next upward move.
