Dogecoin (DOGE) price closed May 2023 up 10% in the red. Despite the rise in daily transactions, fueled by the DRC-20 Ordinals, the price of DOGE continued to decline. What is the reason for DOGE’s bearish price momentum?
The on-chain data reveals that there has been a significant spike in network activity across the Dogecoin ecosystem. However, the sharp rise in network activity did not appear to translate into price gains.
With Dogecoin Transaction Fees Still Rising, How Long Will Bears Be in Control?
Dogecoin transactions increased by 8,200%
While Dogecoin made headlines for the astronomical jump in network activity in May 2023. However, the DOGE price remained in a bearish trend.
The chart below shows how Dogecoin network activity increased by 8,200%, from 19,240 transactions on May 1 to 1.45 million transactions recorded on May 31. Meanwhile, during this period, the price of DOGE fell by almost 10%.
The number of transactions It summarizes the number of confirmed transactions on the blockchain network over a specified period.
Historically, the price of Dogecoin has often increased when there is a steady rise in transaction activity. Hence, the current difference between DOGE rice and The number of transactions raises some concerns.
Whale activity has ceased on the Dogecoin network
While total transactions on the Dogecoin network are up, a deep dive into the on-chain data reveals a significant drop in large transactions.
Between May 12th and May 31st, Whale transactions decreased by 56% from 1,930 to 854 transactions.
This indicates that the majority of transactions that fueled the sudden surge in Dogecoin network activity by 8,200% are DRC-20 Ordinals transactions. Due to the small size of these transactions, they contributed little economic value.
This provides reasonable confirmation of bearish price expectations. Whale transactions are critical to DOGE’s price outlook. This is because it provides much needed liquidity to the market while contributing higher economic value to each transaction.
Hence, if the conditions remain unchanged, the DOGE price may drop further in the coming days.
DOGE Price Prediction: Bears can pay as little as $0.06
A prolonged decline in the whale trade indicates that the price of DOGE is likely to drop towards $0.06. But according to IntoTheBlock‘s In/Out cash price (IOMAP) Distribution data, DOGE is likely to face some bullish support around $0.065.
In the region, a buy wall installed at 326,000 addresses purchased 6.13 billion DOGE tokens at an average price of $0.065.
But if this supports Caves as expected, DOGE price is likely to drop further towards $0.06.
However, the bulls can negate this pessimistic narrative if DOGE price breaks above $0.08. But as we saw above, some of the 547,500 investors who bought 47.9 billion coins at an average price of $0.08 can resist.
But if this resistance level fails to hold, the DOGE bulls can push higher to $0.09.
In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions.