Dogecoin (DOGE), the Shiba Inu-themed memecoin, finds itself in a curious situation. While the number of holders and overall interest in DOGE is increasing, its price has dropped significantly over the past week.
This anomaly reflects the widespread volatility of the memecoin market, currently experiencing an influx of novice traders.
IntoTheBlock, a blockchain analytics firm, revealed a record number of addresses holding MemeCoins for less than a month in March.
This trend indicates a wave of new investors attracted to the memecoin craze. However, Dogecoin, despite being the leader in terms of both traders and transactions, has seen its price drop by more than 20% in the past week.
DOGE technical signs critical?
Technical indicators paint a relevant picture for DOGE’s near future. Chaikin Money Flow (CMF), which measures buying and selling pressure, has gone below zero, indicating capital outflows and bearish sentiment.
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On the other hand, On-Balance Volume (OBV), indicating buying pressure from time to time, has also fallen, confirming further declines. This combination of falling prices and falling trading volumes could extend the decline and weaken DOGE’s support levels.
Optimism lingers for Memecoin
Meanwhile, cryptocurrency analyst Trader May is bullish on DOGE. He believes that if Memecoin maintains its current support levels, its price can rise significantly. However, Mayne’s prediction hinges on DOGE’s ability to defy current bearish technical indicators.
Big spot here for Doge imo.
The bulls really want to hold this area, I think a loss of support here opens the door to a much bigger correction.
RR has been positively skewed for a long time, if we can maintain and reclaim those old highs, the party will continue. pic.twitter.com/HgSX60XuXv
— Mayne (@Tradermayne) 3 April 2024
Broad cryptocurrency market sentiment also plays a significant role in influencing the prices of individual coins. If the overall market experiences an improvement, it may drag the DOGE down further. In addition, regulatory scrutiny or negative news surrounding memecoins could dampen investor confidence and lead to a sell-off.
Dogecoin finds itself at a crossroads. While MemeCoin’s craze is attracting new investors, recent price declines and bearish technical indicators raise concerns about its short-term future.
The decisions of existing holders, the whims of social media and overall cryptocurrency market sentiment will all be key factors in determining whether DOGE can defy the odds and regain its former glory.
Featured image from Pexels, charts from TradingView