Dogecoin (DOGE) has recently reached a 3-year high of $0.43 on November 12, but has since retreated to $0.38, while maintaining a daily increase rate of 3%.
However, on-chain data indicates that the price surge has prompted many long-term holders to realize their profits. If this trend continues, Dogecoin risks losing a significant portion of its recent gains in the short term.
Average Coin Age Decreases by 1% in a Week
According to BeInCrypto's on-chain performance evaluation of Dogecoin, the average coin age has decreased in the past week. Sentiment data shows a 1% decrease over the past 7 days.
The average coin age represents the average holding period of the circulating coins. This provides insight into how long coin owners have been holding their coins before moving or selling them. A decline in this metric indicates that long-held coins are being moved or traded more frequently, often interpreted as a bearish signal as long-term holders realize their profits.
Additionally, the positive Market Value to Realized Value (MVRV) ratio observed for Dogecoin suggests that the meme coin is currently overvalued. This could be a catalyst for long-term holders to sell in order to realize their gains. According to Santiment's data, Dogecoin's MVRV ratio is currently 232.36%.
The MVRV ratio is a key metric that analyzes the value of a cryptocurrency by comparing its market value (the current price of all circulating coins) to its realized value (the price at which the coins were last moved on the blockchain).
A positive MVRV ratio indicates that the market value is higher than the realized value, meaning the asset is overvalued. Historically, many have viewed this as a sell signal for profit-taking.
With a MVRV ratio of 236.36%, Dogecoin's current market value is 236% higher than its realized value. This means that if all holders were to sell, they would realize an average profit of 236%. Such a high MVRV suggests that a prolonged price correction may occur as more investors take profits.
DOGE Price Prediction: Returning Long-Term Holders Could Facilitate Upside
Currently trading at $0.38, Dogecoin is just below the $0.39 resistance level. If selling pressure increases, the price could drop to the $0.31 support level.
Failure to hold this level could lead to a further decline below $0.30, potentially reaching $0.21. Such movements would push the Dogecoin meme coin price further away from the uptrend that last saw it reach $0.50 in May 2021, surpassing $0.47.
However, if the market sentiment turns positive and long-term holders maintain their positions, increased demand for Dogecoin could push the price back above $0.47 and towards the $0.50 price range.
