Dogecoin’s prices have risen 31% in the past week, attracting the attention of a wider investor due to the bullishness of the wider market. Recent rallying stemming from optimism and speculative trading led to the dogcoin trading at $0.22.
However, given the circumstances surrounding the possibility of price correction, it is unlikely that this upward movement will be maintained.
Dogecoin’s speculative rally sign points to a reversal
DogeCoin’s current network value (NVT) ratio is higher than during the November 2024 Bull Run. A high NVT ratio indicates that network ratings exceed transaction activity. This shows that speculative sentiment has driven recent rallies beyond a strong foundation.
The NVT ratio has risen in past bull runs, but now refers to unsustainable rally. Unlike the November 2024 Bull Run, this recent surge lacked the necessary foundation when strong market foundations and substantial trading activities favored the rise. This shows that Dogecoin’s current price spikes are driven by short-term market hype rather than long-term growth potential.
Dogecoin’s recent gatherings are also characterized by a relatively low volume of transaction. This further supports the idea that this price surge is speculative. In November 2024, Dogecoin’s price spikes were supported by a massive trading volume of $10.27 billion. However, this week, despite similarly rising network values, Dogecoin saw only $1.2 billion in transaction volume at its peak.
The gap between price rises and stagnant trading volumes indicates that Dogecoin’s demand has not been able to accommodate recent price increases. This mismatch further suggests that the gathering is driven more by sentiment than solid market interest.
Doge Price needs to solidify support
Dogecoin’s price is currently at $0.22 after a 31% increase in the past week. Although it exceeds this important level of support, the speculative nature of the rally suggests that it is unlikely to continue climbing. Market conditions and lack of robust demand increase the likelihood of a reversal.
Given the factors mentioned, Dogecoin is vulnerable to price drops. If the price falls below $0.22, you are likely to head towards $0.19 or $0.18, and you could lose $0.20 of psychological support in the process. This confirms a bearish outlook and marks the end of a recent rally.
The only scenario where you can disable a bearish paper is if the Dogecoin price can bounce back a support level of $0.22. A recovery above $0.24 will help restore investor confidence. For now, however, market signals point to price adjustments rather than making further profits.
Disclaimer
In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. Although Beincrypto is committed to accurate and unbiased reporting, market conditions are subject to change without notice. Always carry out your research and consult with an expert before making any financial decisions. Please note that our terms and conditions, privacy policy and disclaimer have been updated.
