For the past few months, Dogecoin (DOGE) has been on a downward trend. The primary meme-based cryptocurrency has struggled to regain bullish momentum after failing to establish firm support in the $0.36-$0.38 range about a month ago.
Since February 17th, the token has witnessed a 13% decline. This downward movement is likely to bring DOGE towards a crucial support level at $0.215.
Can the bulls step in to protect this level and kickstart a recovery?
Is Dogecoin Offering a Buying Opportunity?
Initially, the daily chart of DOGE displayed a bearish market structure. However, there was a shift towards the end of January when the price dropped below the swing low at $0.305 and failed to hold the 50% retracement level.
At the current moment, Dogecoin is edging closer to the 78.6% retracement level at $0.215. Notably, during the rally in March 2024, the $0.2 and $0.215 levels served as significant resistance points. The current retest of these levels as support indicates a positive outlook for the bulls.
Nevertheless, any weakness in Bitcoin (BTC) could still have a negative impact on the overall altcoin market.
According to data from Santiment, the recent price drops present a promising buying opportunity for the medium term. Analysis of the Mean Coin Age (MCA) and MVRV ratios over the past three months revealed a consistent upward trend in MCA.
Additionally, the MVRV ratio currently stands at -31%, marking its lowest point in the last three months. This suggests that Dogecoin holders have experienced significant losses on average during this period.
The increasing MCA indicates accumulation. Despite the downtrend in price, the scarcity of DOGE transactions in the previous three months explains the upwards trend in MCA and signals a bullish sentiment.
Collectively, these indicators give a buy signal for the token.
Supply distribution data indicates a rise in accumulation across all holder cohorts, with the exception of those possessing over 100 million Dogecoins.
Notably, the 100k-10M DOGE holder group has gradually expanded in numbers over the past month, albeit at a slower pace compared to smaller accounts.
With an annual issuance of five billion DOGE, the meme-inspired coin experiences mild inflation. Yet, the surge in holder volumes in February hints at a heightened demand that could potentially bolster Dogecoin’s recovery.