Recent movements in the price of Dogecoin have been quite dramatic, as the widely known meme-based cryptocurrency surged to one of its highest points in the past month before undergoing a sharp turnaround. This volatility has raised concerns among investors regarding how far the asset could plummet if the current bearish trend persists.
Examining the trend in DOGE’s price, the NVT (Network Value to Transaction) ratio, and overall market sentiment offers some insights into where the coin might be headed in the days ahead.
Price Movement Suggests a Possible Downtrend for Dogecoin
Analysis of Dogecoin’s price chart reveals a clear downtrend following its recent peak.
After reaching a high of $0.17976 during the bullish phase, the cryptocurrency has retraced to trading near $0.15048 at the time of this writing. The drop in price is accompanied by diminishing trading volume, indicating a weakening purchasing momentum.
The MACD indicator, which previously displayed bullish tendencies, is now leveling off, signaling a potential shift towards bearish market dominance.
Similarly, the RSI is hovering close to the 56.63 mark, transitioning from overbought regions. Should this pattern persist, Dogecoin might test critical support levels at the 0.382 ($0.14970) and 0.5 ($0.14042) Fibonacci retracement levels.
Increasing NVT Ratio Indicates Possible Overvaluation of Dogecoin
The Network Value to Transaction (NVT) ratio is another vital metric worth monitoring for Dogecoin. Over time, Dogecoin’s NVT ratio has witnessed peaks and valleys, with higher peaks often coinciding with market sell-offs.
The recent surge in the NVT ratio implies potential overvaluation concerning the current transaction volume, hinting at a potential price correction.
A high NVT ratio can signify an inflated valuation without a corresponding surge in transaction activity, possibly indicating speculative trading rather than genuine network utility.
If this metric continues its upward trajectory, it may indicate further downside risks for Dogecoin.
Crucial Levels to Monitor Amidst Pessimistic Sentiments
In addition to the previously mentioned support thresholds, traders are likely closely monitoring Dogecoin’s 50-day and 200-day moving averages, positioned around $0.12409 and $0.12724 respectively.
A breach below these moving averages could trigger added selling pressure, pushing DOGE to retest the $0.12 zone. Conversely, if Dogecoin manages to stabilize around $0.15, it could suggest that the recent downtrend is approaching exhaustion.
Nevertheless, given the present market sentiment and the elevated NVT ratio, the prevailing outlook leans towards a downward trajectory in the short term.
The recent price trend of Dogecoin alongside the escalated NVT ratio paints a challenging path ahead. If bearish sentiment persists, Dogecoin might revisit lower support levels before finding a stable footing.