Can Dogecoin Rally Further? Here’s What On-Chain-Data Says
06 Abril 2023 - 11:00AM
NEWSBTC
The Dogecoin (DOGE) price experienced a whopping rally of over 35%
at the beginning of the week after Twitter CEO Elon Musk replaced
the Twitter logo with the Dogecoin mascot, a Shiba Inu. Initially
without comment, the image changed until Musk spoke up. Musk shared
a cartoon drawing of the Dogecoin dog sitting in a car with his
driver’s license being checked by a police officer. In the ID
document, the Twitter logo can be seen in the place of the image,
with the dog saying, “That’s an old photo.”
pic.twitter.com/wmN5WxUhfQ — Elon Musk (@elonmusk) April 3, 2023 In
his usual manner, Musk has thus once again triggered a massive DOGE
pump. But now the question is whether the price increase is
sustainable and currently only consolidates or whether DOGE will
drop back to its price level before Musk’s action. Can Dogecoin
Continue To Rise? On-chain analytics service Santiment released an
analysis today in which they examine the sudden Dogecoin pump and
the implications of it. Brian Quinlivan, Director of Marketing at
Santiment, writes in his analysis that crypto Twitter has
predictably reacted to the action with “polarizing” opinions. “Most
know by now that when Elon does something on Twitter, it’s usually
for the purpose of getting laughs, attention, or money. Perhaps in
this case, all three were achieved,” Quinlivan states. Related
Reading: Dogecoin Dominates Top 10 Crypto Roster With 20% Rally In
Last 7 Days Santiment’s data shows that discussion rates for
Dogecoin “absolutely exploded.” However, the price spike ended
almost immediately thereafter, followed by a second spike as the
volume cooled over the inorganic spike. Quinlivan adds: But like
any asset, no matter how meme-ified, we can still take things away
from this and analyze what exactly is going on now that prices have
calmed down a bit and $DOGE has corrected back -9% from its
shocking surge. According to the Santiment analyst, there were
numerous top signals that indicated exactly when key players exited
the trade or at least took large profits. Quinlivan also speculates
that these players “probably knew about the planned DOGE pump.”
Active addresses and circulating volume, trading volume and
transaction volume, as well as whale transactions (over $100,000)
all increased rapidly, decoupling from the rest of the crypto
market. According to the analyst, this was a “pretty solid bet”
that the price formed a local top at $0.1047. Related Reading:
Dogecoin Price Prediction: Doge Rally Faded But Not Likely Over On
the other hand, the 30-day Market Value to Realized Value (MVRV)
suggests that DOGE could have further upside potential. The value
is currently at +11%, which means there is room to the upside:
Typically when altcoins hit +20% or more, this is a “danger zone”.
Considering it didn’t quite get that high, even with the massive
Elon-induced price surge, there could still be some extra cushion
for prices to rise further. Whales Take Profits However, an
analysis of DOGE addresses, divided by size into fish (0-10 DOGE),
dolphins (10-10,000 DOGE), sharks (10,000-10 million DOGE) and
whales (10 million or more DOGE) must be considered rather bearish.
While the smallest fish addresses bought aggressively when the
price peaked, dolphins and sharks showed no signs of getting
involved in the rally at the local top. Instead, their downward
trend of the past six weeks continued. Whales were showing signs of
accumulation before Musk’s action. However, interest plummeted when
the DOGE logo appeared on Twitter and the price hit its top.
Quinlivan remarks: It was likely something was known by massive
DOGE holders, eg. people close to him, and of course Elon himself.
This is just speculation, of course, without knowing the identities
of the owners of these addresses. At press time, the Dogecoin price
stood at $0.08910. A daily close above $0.08891 could be of
significant importance to reignite the upside potential mentioned
by Santiment. Featured image from iStock, chart from
TradingView.com
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