Key technological milestones are about to be broken
As of the writing of this article, Dogecoin (DOGE) is at a critical technical juncture, aiming for a monthly closing price above $0.20. The current trading price is $0.1813, showing a slight increase of 0.33% over the past 24 hours.
Despite facing some resistance, Dogecoin's price structure shows strong bullish momentum compared to previous months. Historical data indicates that consistently holding above major resistance levels typically leads to further rebounds, and Dogecoin's breakout attempts are enhancing market optimism.
Network activity is somewhat sluggish
Despite Dogecoin's price efforts, on-chain activity remains relatively sluggish. According to Santiment data, the number of daily active addresses for Dogecoin is 62,588, with approximately 61,411 transactions.
Although these metrics have recently improved, they remain far below the network peak anticipated by the end of 2024. Therefore, the sluggish network activity may indicate insufficient participation from retail investors.
MVRV ratio reveals holder behavior
Dogecoin's MVRV ratio is 27.25%, indicating that holders are still in a moderate profit state and have not yet shown signs of overheating. Historically, when the MVRV value exceeds 50%, it is often accompanied by significant pullbacks. Therefore, the current moderate MVRV value helps alleviate market concerns about a large-scale sell-off.
Supply dynamics: Increasing scarcity
Dogecoin's supply-side indicators show encouraging signals, with the stock-to-flow (S2F) ratio sharply rising to 64.00. The S2F model measures the ratio between circulating supply and newly issued supply, with a higher ratio indicating increased asset scarcity. A rise in S2F usually signals an improvement in fundamental value, consistent with the historical trend of price appreciation.
Derivatives market sentiment is bullish
Sentiment in the derivatives market further confirms Dogecoin's bullish prospects. According to Binance data, 71.33% of DOGE/USDT perpetual contract accounts hold long positions, while short positions account for only 28.67%.
This brings the long-short ratio to 2.49, indicating strong confidence among traders for a DOGE price increase. Despite the overall bullish market, any shift in sentiment could exacerbate volatility.
Potential major breakthroughs are imminent
The technical aspects and on-chain data of Dogecoin reinforce its bullish outlook. Although network participation remains cautious, moderate profit levels, high scarcity, and a dominant long position in the derivatives market lay the foundation for price increases.
Therefore, ensuring a monthly closing price above $0.20 may act as a catalyst for Dogecoin to return to higher price levels, potentially reaching the historical high of $0.74.
