Dogecoin (DOGE) price has stagnated between $0.072 and $0.075 zone for the past 3 weeks. The recent DRC-20 Ordinals hype has seen transaction volumes skyrocket to unprecedented highs. But on-chain data show how this appears to be undermining the chances of a bullish DOGE price breakout.
On May 22, 2023, the Dogecoin (DOGE) blockchain network exceeded 1.3 million daily transactions for the first time in history. But on-chain data shows DRC-20 Ordinals hype has not impacted DOGE price prospects materially.
With Dogecoin transaction fees still on the rise, will this trigger a more negative DOGE price prediction?
Dogecoin Price Remains Stagnant Despite Spikes in Transaction
While Dogecoin has made headlines for its growing network activity, DOGE’s price has remained relatively stagnant.
The chart below shows how Dogecoin network activity soared by 1400%, from 88,450 transactions on May 14 to 1.35 million transactions recorded on May 22. Meanwhile, DOGE price has remained relatively unchanged at $0.073 during this period.
Quite literally, Transaction Count sums up the number of transactions that occur on a blockchain network during a specific trading period.
Historically, Dogecoin price has increased whenever there is a sustained spike in transactional activity. Hence, the worrying negative divergence between Price and Transaction Count observed above raises concerns.
It might imply that these new DRC-20 Ordinals transactions are taking up valuable block space but not adding material economic value to the network.
Whales are Turning Away From Dogecoin
A major criticism of Ordinals by Bitcoin maximalists is the unintended consequence of rising network fees. This phenomenon now appears to be also rearing its head on the Dogecoin network.
Between May 10 and May 22, the average transaction fees on the Dogecoin network increased three-fold.
Total Fees aggregate the total amount users spend to transact on a blockchain within a given period. When transaction fees rise, it dissuades users from carrying out transactions leading to a drop in network traction and, ultimately, a price decline.
In confirmation of this thesis, the chart below shows that Large Transactions on the Dogecoin network started to decline around May 13. This coincides with the period that DRC-20 Ordinals transactions started to spike.
This implies that whale investors are conducting fewer transactions in reaction to the relative network congestion and fee spikes caused by the “Doginals”
Whale transactions are critical to any cryptocurrency’s price prospects, providing much-needed liquidity. Hence, if the circumstances remain unchanged, DOGE’s price could enter another downward spiral in the coming days.
DOGE Price Prediction: The $0.07 Support is Critical
According to IntoTheBlock’s In/Out of the Money Price distribution data, the bears will likely force a DOGE price downsizing to $0.07.
But, the 56,870 addresses that bought 853 million DOGE tokens are expected to offer considerable support at that critical $0.07 zone.
But if that support caves as expected, then the DOGE price will likely slump further toward $0.062.
Still, the bulls can negate this pessimistic narrative if the DOGE price can break out above $0.078.
But as seen above, some of the 43,530 investors that purchased 28.9 billion coins at the maximum price of $0.078 range could resist.
This large cluster of possible break-even sellers could easily stall any price movements higher while representing a massive resistance zone.
But if that resistance level fails, the DOGE bulls can expect the price to climb to $0.085.
In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions.