Is Dogecoin experiencing a period of tranquility before potential turbulence? Within February alone, the asset saw an influx of over half a million new holders.
Despite this surge, the presence of a sizable number of profitable holders and a fragile support zone raises the possibility of an impending downturn. The question arises: is this indicative of an approaching bearish trend, or will the Dogecoin community successfully resist a decline?
Dogecoin (DOGE) Achieves a Historic Milestone with 6 Million Holders
The current count of DOGE holders stands at 6.5 million, marking one of the most notable figures in the cryptocurrency markets. This milestone was achieved on February 2, reflecting a significant surge in Dogecoin holders, rising from 5.82 million on January 28 to 6.35 million on February 10. This denotes an impressive nearly 10% increase in holders, especially noteworthy for a token of this scale.
It’s noteworthy that this growth was subsequently accompanied by a price upswing, occurring just two weeks later. Between February 10 and March 4, DOGE prices surged from $0.081 to $0.1950, representing an approximate 141% increase.
Nevertheless, despite the significant surge in the number of holders at the start of February, it has remained relatively stable since the beginning of March.
While this observation may not carry intrinsic significance, the stability, following a 140% price rally and an increasing number of holders, might suggest a potential slowdown in new capital flowing into DOGE. Investors could be expressing uncertainty about the sustainability of the bullish sentiment.
Profitable holders might exert selling pressure.
A significant number of holders joined in two weeks prior to the price surge, contributing to the increasing proportion of profitable DOGE holders.
Remarkably, over 5.24 million addresses, coincidentally mirroring the total number of DOGE holders recorded on November 24, 2023, find themselves in a profitable position. This constitutes a substantial 84.75% of all holders. A minority, comprising 12.28%, faces losses, while a small fraction of about 2.28% remains at the break-even point.
With almost 85% of addresses currently in a profitable state, there’s a plausible expectation that this could generate substantial selling pressure on DOGE. The reasoning lies in the likelihood that many of these holders may opt to capitalize on their gains, choosing to sell their holdings in the upcoming days to realize their investment positions.
The most recent occurrence of the percentage of profitable DOGE holders exceeding 80% was in May 2021, reaching an astounding 93%.
Following this period, there was notable market activity, marked by a substantial correction of 67.86% for DOGE over the subsequent five weeks. This historical precedent raises the possibility that current market conditions might replicate past outcomes, potentially triggering a similar market response.
Dogecoin Price Prediction: Emphasis on the $0.15 Support Level
The present market dynamics for DOGE reveal a convergence in trend lines, with the short-term 9-day Exponential Moving Average (EMA) recently falling below the 26-day long-term EMA. In the realm of market analysis, this development is commonly perceived as a bearish signal, often prompting concern among analysts and investors.
The ensuing trend following this EMA crossover indicates a growing momentum on the bearish side, suggesting an increasing dominance of sellers in the market.
Should this downward trajectory persist, there is a plausible scenario where the DOGE price might approach and potentially test the established support level situated at $0.15.
In the event that the $0.15 support proves insufficient, additional bearish pressure could lead to a descent in DOGE’s price towards the subsequent support level, positioned around $0.12.
On the flip side, a bullish scenario for DOGE could materialize by maintaining a position above $0.15, signifying active buyer engagement and potentially reversing the prevailing downtrend. A more decisive bullish signal would be observed if DOGE successfully breaches the resistance level at $0.1646. Such an occurrence could signify a shift in the trend, potentially initiating an upward trajectory—especially if accompanied by increased trade volumes—and paving the way for a bullish reversal, with a subsequent challenge of the $0.1757 resistance.
Reflecting on the dynamics of 2021, where over 80% of DOGE addresses were profitable, the price continued to rise. Considering DOGE’s established correlation with the movements of BTC and ETH, a recurrence of similar bullish conditions could potentially lead to a notable rally.