The number of new Dogecoin (DOGE) investors has increased in recent days, suggesting the potential for a price rally similar to its previous surge between September 23 and December 12. During that period, DOGE’s price climbed from $0.10 to $0.47.
Could this sudden influx of holders be the catalyst for a breakout, or will the meme coin experience another drawdown?
Investors Take New Dogecoin Positions Amid Historical Support
Between November 22 and December, the total number of Dogecoin holders dropped from 7.14 million to 6.80 million. Interestingly, this decline came around the same time DOGE’s rally ran out of steam, as the price declined from $0.47 to $0.39.
This price decrease and the decrease in holder count suggest significant profit-taking at the time. However, on-chain data from Santiment, as of this writing, shows that things have now changed.
According to the analytics platform, the number of DOGE holders has surged to 6.68 million. This implies that 60,000 new holders have actively added the meme coin to their wallets within the past 10 days.
A surge in holder count is generally seen as a bullish sign, indicating that the cryptocurrency is drawing in retail investors. Furthermore, this is also happening at a time when crypto whales continue to play a vital role in the direction of the coin. If this trend continues, DOGE’s price could be poised to surpass $0.42.
The Market Value to Realized Value (MVRV) ratio supports this thesis. The MVRV measures the ratio between a coin’s current price and the average price at which it was acquired. The metric also assesses whether an asset is overvalued or undervalued.
An extremely high MVRV ratio indicates a rising level of unrealized profits, indicating that the cryptocurrency may be nearing an overvalued state. Conversely, a low MVRV ratio suggests the asset is undervalued, potentially presenting a buying opportunity.
As of this writing, Dogecoin’s 30-day MVRV ratio has reversed from negative territory to 0.69%. The last time such a reversal occurred, the price jumped from $0.10 to $0.47, as stated earlier. Therefore, if history rhymes with the current pattern, then DOGE could experience another parabolic rally.
DOGE Price Prediction: $1 Target Still in Place
Technically, the daily DOGE/USD chart shows the formation of a bull flag. A bull flag is a pattern characterized by two rallies and separated by a brief consolidation period.
As seen below, the pattern begins with a sharp, nearly vertical price spike known as the flagpole, driven by aggressive buying that catches sellers off guard. This is followed by a pullback forming the “flag,” represented by parallel upper and lower trendlines.
During the pullback, the initial rally slows due to profit-taking, and the price consolidates within a tight range, creating slightly lower highs and lower lows. Meanwhile, it seems that Dogecoin’s price is on the verge of resuming the uptrend with a potential breakout on the cards.
Once validated, DOGE’s price might climb to $0.60. In a highly bearish scenario, the meme coin’s value could close in on the $1 mark.
However, if the price drops below the lower trendline of this flag, this prediction might be invalidated. A decline in the number of new Dogecoin holders might also cause a price decrease. In that case, DOGE could sink to $0.33.
Disclaimer
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