Dogecoin’s Bumpy Ride to Recovery – Brace for Volatility Ahead!

Dogecoin''s grinding climb back from the crypto abyss won''t be smooth—buckle up for turbulence.

Why the meme coin''s comeback demands steel nerves

The ''people''s crypto'' keeps teasing believers with false dawns—but this rebound might stick (or crash spectacularly). Either way, hedge funds will still get richer while you HODL.

Source: DOGE/USDT on TradingView

The swing market structure was firmly bearish, and the price was below the 78.6% Fibonacci retracement level. These levels were plotted based on the rally in early May. DOGE saw a liquidity cluster at the local low at $0.17, and it may be likely that the price WOULD dip to this level once again before recovery.

Some on-chain metrics suggested a potential buying opportunity, but the sustained selling on the OBV highlighted seller dominance.

Dogecoin gives buyers a green signal, but brace for volatility

Source: Glassnode

The Network Value to Transactions Signal (NVTS) metric is a modification of the NVT ratio. The original metric uses the market capitalization and the daily on-chain transfer volume to understand if the asset is overvalued or undervalued based on its network utility.

The modified version uses the 90-day moving average of the daily transaction volume to help the NVTS function better as a leading indicator. At press time, the NVTS was below its May-June 2024 levels.

Hence, this could be a positive sign for investors since the memecoin was undervalued and presented a buying opportunity.

Source: Glassnode

The exchange net position change turned negative in early June. It did the same earlier in the year in January. This could be a sign of accumulation as DOGE flowed out of exchanges and indicated that less dogecoin was available for selling on exchanges.

However, negative net position change does not imply a rally is imminent. On the contrary, Doge trended south for three months, despite the accumulation earlier this year.

Traders should remain cautious and expect a retest of $0.17 in the coming days, and potentially further losses. Investors can begin to look for buying opportunities and employ strategies such as dollar cost averaging.