Dogecoin Seeks to Bounce Back Following Market Downturn
Dogecoin has seen a slight recovery after the significant market decline last week, which pushed prices down to their lowest levels since September 2024. The well-known meme coin experienced a 5% increase following a downturn during the Black Friday liquidation event that impacted the wider market.
Even with this brief increase, experts warn that the ongoing recovery does not exhibit robust confidence and could face challenges in maintaining its momentum.
On-Chain Activity Indicates Weak Market Demand
According to data from Glassnode, there has been a noticeable drop in engagement among new Dogecoin addresses following the crash last Friday. In a matter of days, the count of distinct wallets engaging with DOGE plummeted from 30,534 to 18,251.
This significant 40% drop underscores diminished retail involvement and indicates that the recent recovery might mainly represent a fleeting market reprieve instead of a resurgence in investor trust.
Long-Term Holders Begin Offloading DOGE Holdings
A significant indicator of vulnerability is the increasing Liveliness ratio of Dogecoin, which monitors the engagement of long-term holders throughout the network. The ratio concluded on October 13 at 0.708, indicating a consistent rise in token activity.
An increase in this metric suggests that long-term holders are selling off their assets, frequently capitalizing on short-term price increases before subsequent downturns.
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Profit Taking Could Pressure DOGE Price Lower
The data suggests that numerous seasoned investors perceive the rebound as a chance to capitalize on strength rather than to build their positions. This behavior often comes before corrections and can heighten negative sentiment throughout the market.
In the absence of fresh interest from retail or institutional investors, DOGE could struggle to hold its current range, possibly returning to earlier support levels in the near future.
Dogecoin Faces Resistance Near $0.249 as Sellers Maintain Market Control
On the daily chart, Dogecoin is positioned beneath its 20-day Exponential Moving Average, which presently acts as resistance near $0.249. The price of the coin hovers around $0.199, indicating persistent selling pressure in the market.
When assets stay under their 20-day EMA, it usually indicates that bears are in charge, leading to a market sentiment that leans towards caution and weakness.
Essential Support Levels Identify Potential Risk Areas in Advance
Experts have pinpointed $0.167 as the next crucial support level for Dogecoin, which may influence the potential for additional declines. Not defending this threshold could lead to another round of liquidations, potentially driving the token down to $0.095.
The current price level marks DOGE’s lowest point in 13 months, observed during the latest market downturn, and could serve as a potential retest point if trends continue as they are.
What Might Change Dogecoin’s Downward Trend
To enhance the recovery, DOGE needs to secure a close above $0.224, which would negate the bearish structure and rebuild buyer confidence. A move past that level may pave the way for a target of $0.264 in the short term.
Nonetheless, a resurgence in momentum hinges on heightened network activity and new capital inflows, both of which are currently constrained as traders maintain a wary perspective following recent fluctuations.
