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Declining Activity: A Red Flag?
Popular meme-inspired cryptocurrency Dogecoin (DOGE) is seeing decreasing transaction volume and fewer large “whale” transactions, according to a recent analysis by crypto market analyst Ali Charts. This drop in activity could indicate reduced interest and confidence in Dogecoin, potentially signaling further price declines.
In a tweet, Ali highlighted a clear peak in both overall transaction volume and whale transactions on the Dogecoin network that coincided with a significant price spike for the token earlier this year. This suggests that large transactions from wealthy “whale” holders may have helped inflate the price at that time.
However, both metrics have fallen sharply since then. “After the peak, both transaction volume and whale transactions drop off, which seems to correlate with a decrease in price,” explained Ali. The price of DOGE has indeed fluctuated within a range over recent months, with no clear upward or downward trajectory.
Besides declining on-chain activity, Dogecoin’s price chart is also caught between key support and resistance levels, according to analysis from trading group Trade Nebula X. Hence, in the short term, the price may continue depending on whether buyers can overcome overhead resistance.
Trading Strategy Amid Uncertainty
“Long positions may be opened near the support area,” advised Trade Nebula X. “If the price breaks above the resistance area, we may see an upward rally.” However, with transaction activity slowing, generating upside momentum could prove challenging.
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Show more +At press time, DOGE traded around $0.08 with a 24-hour loss of 0.29%, but a 4.05% 7-day gain.
Consequently, Dogecoin’s fading hype and reducing real-world usage may hamper any substantial, long-lasting price gains moving forward unless new catalysts emerge. Hence the coming months could be pivotal in determining whether Dogecoin regains its rocket-like trajectory or continues drifting lower into irrelevance.
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