Dogecoin has recently shown a bearish market structure, with a downward trend since December. The leading memecoin has struggled to gain bullish momentum since failing to turn the $0.36-$0.38 zone into support a month ago. This decline has caused Dogecoin to lose 13% of its value since February 17th, bringing it closer to a key support level at $0.215. The question now is whether the bulls will be able to defend this level and spark a potential comeback, presenting a potential buying opportunity for investors.
The daily chart of Dogecoin initially displayed a bearish market structure until the end of January when the price dropped below the swing low at $0.305 and failed to hold the 50% retracement level. Currently, Dogecoin is approaching the 78.6% retracement level at $0.215, which acted as a strong resistance during the rally in March 2024. The retest of these levels as support could be seen as a positive sign for the bulls, although any weakness in Bitcoin could still impact the altcoin market negatively.
According to data from Santiment, recent losses in Dogecoin have provided a good buying opportunity for the medium term. The Mean Coin Age (MCA) and MVRV ratios over the past three months have shown a steady uptrend in MCA, indicating accumulation. The MVRV ratio, currently at -31%, its lowest point in three months, suggests that Dogecoin holders have experienced significant losses on average. Despite the price downturn, the lack of transactions over the past three months explains the MCA trend and suggests bullish conviction, providing a buy signal for the token.
Supply distribution data revealed that accumulation is occurring among all cohorts of Dogecoin holders, except for those owning more than 100 million Dogecoins. The 100k-10M DOGE cohort has been increasing steadily over the past month, albeit at a slower rate than smaller accounts. The annual issuance of five billion DOGE makes the memecoin slightly inflationary, but the growth in holder numbers in February indicates increased demand and potential support for Dogecoin’s recovery.
Ultimately, the future of Dogecoin remains uncertain as it struggles to regain bullish momentum in a challenging market environment. However, the recent data suggests that there may be a buying opportunity for medium-term investors, as accumulation among holders and positive signs from on-chain metrics indicate a potential comeback for the meme-inspired cryptocurrency. As market conditions continue to evolve, it will be crucial for investors to closely monitor developments in both Dogecoin’s price action and overall market sentiment to make informed decisions about the token’s future prospects.
