Why Dogecoin (DOGE) network activity signals bullish potential

Dogecoin (DOGE) holders are ready to rebound after a 25% correction in February. Despite the recent drop in prices, network activity is on the rise. Will it be enough to get the bulls into action?

Positive divergence as network activity increased

In the last 30 days, the world’s largest meme coin by market capitalization has fallen by almost 25%. Nevertheless, a critical analysis of on-chain data suggests that increased network activity could lead to a rebound.

Data compiled by cryptocurrency analytics firm Sentiment has shown a recent spike in daily active addresses on the Dogecoin network.

Since March 1st, the number of daily active DOGE addresses has increased by 40% while the price has fallen. The positive divergence between Dogecoin price and daily active addresses suggests that new crypto market participants may be attempting to buy the dip.

Dogecoin DOGE Daily Active Addresses
DOGECOIN (DOGE) Daily Active Addresses, March 2023. Source: Emotion

Daily Active Addresses measures the number of unique addresses that interact on a network per day. Historically, previous DOGE rallies have often been preceded by spikes in daily active addresses.

Similarly, a closer look at the transaction volume on the DOGE network in recent days also paints an optimistic picture. The number of daily DOGE transactions has doubled over the past seven days to reach its highest daily throughput volume in 2023.

Dogecoin DOGE price transaction count
DOGECOIN (DOGE) Transaction Count, March 2023. Source: Emotion

Given its historically positive correlation with price, it seems reasonable for DOGE holders to expect a price rally to follow the recent trend.

Dogecoin (DOGE) Price Prediction: Stiff Resistance Ahead

With regard to price projections, IntoTheBlock’s Global In/Out of Money (GIOM) data provides relevant insights.

Currently, only 24.5% of DOGE holders are in a profitable position. This suggests that most crypto investors can avoid selling at large losses around current prices.

On-chain data suggests that the next price rally for Dogecoin will be tested around the $0.075 area, where 81,000 addresses holding 35 billion DOGE may decide to take profits.

Nevertheless, if Dogecoin breaks this barrier, it could encroach on $0.084, where around 400,000 addresses hold 34 billion coins.

Dogecoin Price DOGE Global In/Out of Money
DOGECOIN (DOGE) Global In/Out of Money Data, March 2023. Source: intoblock

Alternatively, if things turn bearish, 333,000 addresses bought 4.8 billion DOGE at around $0.64, which would provide important support. But given the low volume around this level, Dogecoin could slide further into a correction to $0.56, where 435,000 addresses have bought 6.7 billion DOGE.




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