Throughout December, Dogecoin [DOGE] has been on a downward trend. The prominent memecoin has struggled to regain bullish momentum ever since it failed to turn the $0.36-$0.38 range into a solid support level a month ago.
From February 17th, the token has experienced a 13% decline. This ongoing downward trend is likely to bring DOGE to a critical support point at $0.215.
Can the bulls protect this level and kickstart a recovery?
Is Dogecoin Forming a Window for Buying?
Initially, the daily chart of DOGE displayed a bearish market pattern. This changed towards the end of January as the price dropped below the swing low of $0.305 and failed to hold the 50% retracement level.
Currently, Dogecoin is nearing the 78.6% retracement level at $0.215. During the March 2024 rally, the $0.2 and $0.215 levels served as strong resistance points. Their retest as support now signals a positive outlook for the bulls.
Nevertheless, any weakness in Bitcoin [BTC] might still exert a downward pressure on the altcoin market.
Analysis from Santiment revealed that the recent losses might offer a promising buying opportunity for the medium term. The Mean Coin Age (MCA) and MVRV ratios from the past three months were reviewed, indicating a consistent upward trend in MCA.
On the other hand, the MVRV ratio stood at -31%, marking its lowest level in the last three months. This indicated that Dogecoin holders have encountered notable losses on average over the past three months.
The rising MCA pointed towards accumulation. Despite the downtrend in prices, the lack of DOGE transactions in the recent three months explained the MCA trend and reflected a bullish sentiment.
Together, these factors signal a buying opportunity for the token.
Data on supply distribution revealed accumulation across all groups of holders except for those with holdings exceeding 100 million Dogecoins.
The cohort owning 100k-10M DOGE has gradually expanded over the past month, although not as rapidly as the smaller accounts.
With an annual issuance of five billion DOGE, the memecoin has a slight inflationary aspect. However, the increase in the number of holders in February suggests growing demand that could potentially bolster Dogecoin’s recovery.