The altcoin market sentiment has been fragile lately. The rally in mid-March brought some coins to new local highs, but they were unable to sustain the move. Dogecoin [DOGE] is one of the many altcoins unable to make new highs. It has been trading within a range since late February.
After the strong downtrend from October, this sideways price trend over the past two months seemed to represent a consolidation phase. That is not to say there won’t be new price lows, however, as this would depend on Bitcoin [BTC] and market conditions.
The new address growth metric uses the growth and contraction in the number of non-zero DOGE wallets to map on-chain growth. A drop in non-zero Dogecoin-holding wallets hinted at a purge of wallets.
The growth tends to increase when Dogecoin goes on a strong rally. In the last eight months, the network growth has progressively slowed down.
The ongoing phase may be reminiscent of the 2024 consolidation in terms of address growth. On the price front though, there were differences, with the primary one being the two-month consolidation above the $0.088 support.
High activity warns of DOGE profit-taking
Since the February crash, active addresses and transaction volumes have seen a hike in activity from 10-19 March. During this time, Bitcoin was moving towards the $76k local high and spurred altcoins higher too.
The surge in activity when DOGE prices approached the $0.104 local highs reflected a tendency to take profits and exit the market. The limited upside and the repeated tests of the $0.09 local support zone were a worry for the bulls.
Finally, the 3-month mean coin age has been falling since January. This showed that short-term holders were selling the memecoin. Additionally, the 3-month MVRV was near the 8% drawdown mark that has sparked sell-offs in recent months.
On the other hand, the 1-year mean coin age has been rising since February. This alluded to accumulation from long-term holders after the selling from October to February.
It remains to be seen if this accumulation is enough for a rally beyond the $0.104 local highs. Short-term holders will likely sell aggressively into any such bounce and holders need to be cautious of expecting too much from any potential relief rally.
Final Summary
- New address growth was low and similar in profile to the 2024 downtrend, suggesting that DOGE might make new lows once more.
- Long-term holders have been accumulating the memecoin since February, but this might not result in a sizeable rally soon.
