Dogecoin Plunges 11%, But This On-Chain Cushion Could End Decline
June 14 2024 - 3:00PM
NEWSBTC
Dogecoin has observed a plummet of 11% over the past week, but this
decline may not continue further, as DOGE is now just above a major
on-chain support block. Dogecoin Is Now Just Above A Major On-Chain
Demand Zone According to data from the market intelligence platform
IntoTheBlock, DOGE is currently above a zone of significant
on-chain demand. In on-chain analysis, “demand zones” refer to
price ranges in which many investors buy their coins. Related
Reading: Solana Set For “A Major 53% Price Move,” Analyst Reveals
Why These zones are determined using blockchain data; the average
price at which an address receives deposits is considered its cost
basis. Below is a chart showing how the Dogecoin price levels near
the current one are based on how many addresses share their cost
basis with them. In the graph, the size of the dots corresponds to
the number of addresses that acquired their coins within the
respective range. It would appear that the $0.096 to $0.139 range
currently looks to be the largest Dogecoin price range in terms of
this metric. More specifically, 409,330 addresses acquired a total
of 45 billion DOGE inside this range. Now, what’s the relevance of
this demand zone, or any other one, for that matter? Generally, the
cost basis is an important level for any investor, so they may be
more prone to show some reaction when the spot price of the
cryptocurrency retests it. A few investors showing this reaction
would naturally not be relevant for the broader market. Still, if
many of them share their cost basis inside the same narrow range,
then a retest could produce a large reaction for the price to feel
its effects. The demand zone around the average price of $0.115 had
many addresses acquire their coins there, so its retest could be
significant for the memecoin. As the current Dogecoin price is
above this range, these investors who bought inside the range would
be sitting on some profits. Historically, such demand zones below
the price have acted as points of support for the cryptocurrency.
This is because investor psychology tends to work out, so these
holders who were in profits before the retest may believe the price
would go up again so they could decide to buy more of the asset. On
the other hand, investors in the red before the retest can fuel the
cryptocurrency’s resistance as they sell in fear that the
price will fall again. “On the upside, DOGE may face resistance
around the $0.16 level, where 20 billion DOGE is presently held at
a loss,” notes IntoTheBlock. Related Reading: Why Is Bitcoin
Stagnant Despite ETF Inflows? Report Answers It remains to be seen
whether the on-chain demand zone below would help stop the
memecoin’s decline if its price drops enough to retest it. DOGE
Price The past week has been a bad time for Dogecoin investors as
the asset’s price has crashed around 11%. Following this drawdown,
DOGE is now trading around $0.142. Featured image from iStock.com,
IntoTheBlock.com, chart from TradingView.com
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