Following a period of decline in prices, Dogecoin (DOGE) has once again experienced a surge in bullish momentum on the market. However, there are indications that a shift in trend might be on the horizon, particularly as the popular meme-inspired cryptocurrency appears to be mimicking patterns observed in its past cycles. Given this scenario, should investors exercise caution moving forward?
Reflecting Historical Patterns
The prominent meme cryptocurrency, Dogecoin, faced a 6% correction in the previous week. Nonetheless, the bulls managed to drive up its value by 3% within the last 24 hours. It is noteworthy that while many perceive meme coins to be primarily influenced by market sentiment and hype, the reality presents a more nuanced picture.
A notable cryptocurrency analyst, Ali Martinez, recently drew attention to a peculiar trend through a tweet. According to Martinez, DOGE appears to be replicating a pattern reminiscent of its behavior in both 2017 and 2020.
In these prior cycles, after experiencing significant price surges, Dogecoin encountered a brief period of decline before resuming its upward trajectory. These retracements coincided with sell signals emerging on Dogecoin’s TD sequential.
Given the recurrence of such events in the past, the possibility of history repeating itself in 2024 remains substantial. Consequently, Martinez suggested that Dogecoin could be testing the patience of investors during the ongoing cycle.
Is History Bound to Repeat?
Recently, a sell signal surfaced once more, prompting CryptoCrypto to investigate whether investors had commenced offloading their holdings. The analysis revealed a notable increase in selling pressure over the past 24 hours.
Monitoring Dogecoin’s sell volume, it was observed that this metric had reached a value of 100. A figure close to 100 signifies a significant surge in selling activity. However, it is important to note that the selling pressure subsided subsequently, with the metric declining to 12.
Moreover, several other metrics painted a rather pessimistic picture. Notably, Dogecoin’s trading volume decreased as its price ascended over the previous day, hinting at a potential reversal towards a bearish trend.
The weekly price drop corresponded to a decrease in Dogecoin’s MVRV, indicating that more investors were experiencing losses. Whale activities around DOGE also dwindled, evident from the decline in the number of large transactions.
Another concerning observation pertained to the network activity of Dogecoin. Data from Santiment highlighted a drop in the daily active addresses associated with DOGE, suggesting a decrease in the utilization of the meme-based cryptocurrency.
Contrarily, a closer analysis of Dogecoin’s daily chart unveiled a bullish pattern in the form of an ascending triangle. At the time of writing, Dogecoin was challenging the resistance level of this pattern.
If the bulls successfully breach this resistance level, Dogecoin could potentially trigger a significant rally that propels its price towards the coveted $1 mark.