Investors holding Dogecoin (DOGE) have just received a warning from analyst Ali Martinez, who has shared a chart highlighting a notable technical signal.
According to Ali, the Market Value to Realized Value (MVRV) ratio of DOGE has just formed a "death cross" with its 200-day moving average (MA) - an event that has previously been closely correlated with sharp price declines.
The chart Martinez shared, taken from Santiment, has highlighted three key elements: DOGE/USD Price (black line), DOGE's MVRV ratio (orange line), and DOGE's 200-day MVRV MA ratio (red line). Martinez stated:
"DOGE has just formed a death cross between its MVRV ratio and the 200-day MA. The two most recent times this event occurred led to 26% and 44% price declines."
The latest "death cross" event occurred as the MVRV ratio (orange line) dropped below the 200-day MA (red line). Ali said that after each of these crossovers, DOGE's price has witnessed two strong corrections: a 26% drop from early September to late October 2023 and a 44% drop from mid-June to late September 2024.
Both of these declines occurred within the marked areas on the chart. After each drop, the Dogecoin price has recovered, but only after touching significantly lower levels. At the time of writing, DOGE is currently trading around $0.265. The MVRV ratio (orange line) is currently at 91%, while the 200-day MVRV MA ratio (red line) is fluctuating around 78.36%.
The MVRV ratio compares Dogecoin's current market value to its on-chain realized value (the last recorded on-chain value of DOGE). The 91% MVRV ratio indicates that DOGE hodlers are currently in profit compared to their entry price, as long as the ratio remains above 1. While the exact interpretation depends on the analyst's MVRV scale application, a high MVRV ratio often implies increased unrealized gains for the asset's holders.
The 200-day MVRV MA is a simple moving average of the MVRV ratio over the past 200 days. This line provides a longer-term view of Dogecoin's current MVRV level, allowing for comparison with past trends. A "death cross" in this context occurs when the short-term MVRV ratio (orange line) drops below the 200-day MVRV MA (red line), often signaling a shift in market sentiment or an increase in selling pressure.
Indeed, Dogecoin's price has started to show signs of weakness in the past few weeks. Since reaching a peak of $0.483 on December 8, DOGE has been consistently forming lower highs and lower lows, reflecting a very clear downtrend. Ali commented:
"DOGE remains in a downtrend, forming lower highs and lower lows. It needs to break above a key resistance level to change the momentum!"
To turn the tide, DOGE needs to break above the $0.44 level. However, the DOGE bulls may face significant resistance levels at $0.31 (Fibonacci 0.382 retracement), $0.342 (Fib 0.5), and $0.375 (Fib 0.618).
Disclaimer: This article is for informational purposes only and not investment advice. Investors should do their own research before making any decisions. We are not responsible for your investment decisions.
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