Dogecoin (DOGE) currently shows no significant volatility, and this is a major issue. This coin has attempted multiple times to break above the $0.175 level but has yet to create a convincing breakout.
While the capital flow from whales and funding rates once suggested a potential breakout, new data tells a completely different story.
Active addresses are declining
Although the price of Dogecoin increased at the end of June, the number of active addresses did not show significant change. The number of daily trading wallets – an important indicator of retail demand and natural market participation – remains stable, with only slight increases at certain times.
This is a concerning sign. It shows that efforts to push the price up are not supported by both new and old users.
When the value increases but there is no corresponding increase in the activity of addresses, these price increases often last only briefly. Dogecoin's past breakouts show that spikes in the number of addresses often occur before or after strong market movements. However, this time the absence of those factors has become very apparent.
Active addresses track wallets interacting with the network each day. When the number of these addresses decreases or shows no growth, it reflects weak user participation and low trading demand.
Dogecoin is still undervalued
The MVRV Z-Score of Dogecoin is currently below 0, indicating that most DOGE investors are suffering unrealized losses. This means that the risk of a sell-off from current investors is relatively low.
Historically, Dogecoin often records strong price increases after the MVRV falls into the negative zone. The price of this coin typically bottoms out just as the Z-Score begins to recover. However, this time that recovery has not yet appeared, creating a difference from previous cycles.
In previous cycles, when the MVRV index turned negative and then reversed, this often signaled the start of a new bull market. However, the current trend of DOGE is sideways, indicating that although this coin is undervalued, the market still shows no signs of re-accumulation.
The MVRV Z-Score is an indicator that compares the current market value of DOGE to the average cost of all holders. When this indicator is negative, it indicates that average wallets are at a loss, often signaling a low price level, but this value can only become positive if there is an increase in buying pressure from new participants.
The price structure is still declining
Dogecoin is currently trading within a descending triangle pattern, with the resistance at $0.175 tested multiple times but unable to break through. Meanwhile, support levels around $0.161 are continuously breaking and recovering, indicating that the price structure is gradually weakening over time.
The RSI is trending downwards, even as the price of DOGE maintains higher lows – this is a classic sign of bearish divergence. This indicates that although the price appears stable, the underlying strength of the coin is weakening. The stability of the number of active addresses further reinforces this assessment, reflecting weak user participation.
RSI measures the market momentum. When the RSI decreases while the DOGE price increases, it indicates that buyers are gradually losing control, a common signal before a price drop. Therefore, even if DOGE manages to break the resistance of $0.175, this is not a strong signal, as the price could revert back down at any time.
If the price continues to drop below $0.161 again, the descending triangle pattern will continue and push the price lower. The invalidation zone of this structure will be below $0.156, and if the price breaks below that level, a deeper correction will open up.
However, if the buyers can overcome the resistance at $0.175, the next resistance will be around $0.183, opening up the opportunity for a positive reversal.