Dogecoin (DOGE) Price Stumbles, But Can It Recover?

Dogecoin has faced a series of setbacks recently, including a failed breakout attempt that led to a decline in its price.

Dogecoin price has faced a series of setbacks recently, including a failed breakout attempt that led to a decline in its price. This downward movement was further exacerbated by a recent comment from Elon Musk, which cast doubt on Dogecoin’s future.

However, despite these challenges, the altcoin is showing some signs of recovery, largely driven by long-term holders (LTHs) who accumulate more DOGE at current low prices.

Elon Musk’s comment on Dogecoin

Recently, Elon Musk took to X, formerly Twitter, to clarify that the US government has no plans to use Dogecoin for any purposes.

His statement came in response to a rumor circulating on the platform. A user had claimed that the government is planning to integrate Dogecoin into its systems for services like taxes and social programs by 2024.

However, Musk intervened to debunk this rumour, stating that it is not true. He specifically mentioned that the government is not using or integrating Dogecoin in any capacity.

Network Value to Transaction (NVT)

Dogecoin’s Network Value to Transaction (NVT) ratio has spiked significantly, reaching a three-month high. This suggests that the network’s value does not match the number of transactions, which could be a sign of a lack of investor confidence.

As the chart shows, Dogecoin’s NVT ratio has experienced a rapid increase from around 100 to a peak of over 600 in the past three months alone. This substantial surge is a strong indicator that the network’s value is outpacing the level of transactional activity.

In essence, a high NVT ratio can be a signal of a lackadaisical market, where investors are largely indifferent and transactional activity remains low despite large sums of cryptocurrency in the network. Conversely, a low NVT ratio is often observed in bull markets.

At present, Dogecoin is exhibiting the characteristics of a bear market, with low transactional volume and a high NVT ratio. This aligns with the recent narrative surrounding Dogecoin, which has seen limited price movements and a lack of significant news to drive market action.

Despite some signs of recovery in the market, LTHs are largely indifferent to the current market trends and continue to accumulate more DOGE.

Despite some signs of recovery, LTHs are largely indifferent to the current market trends and continue to accumulate more DOGE.

This is evident in the recent spike in the Hodler Net Position Change. LTHs have been actively scooping up DOGE during the recent dip, which is a strong indicator of their conviction in the long-term potential of this cryptocurrency.

This accumulation is crucial as it provides a level of support for the coin. It helps prevent further price declines and sets the stage for a recovery once the market momentum shifts.

Moreover, the increased position change suggests that LTHs are not fazed by recent market turbulence or Elon Musk’s controversial comment about the US government not using any cryptocurrencies.

These persistent buyers are largely undeterred by the integration rumors or the comment by the Tesla CEO, which had a slight impact on the price of the meme coin.

Dogecoin price outlook

Dogecoin is currently trading at $0.163, with the price just below the support level of $0.164. Over the last five days, the coin has experienced a 16% decline following a failed attempt to break through the $0.198 resistance level.

This failure to breach key resistance levels indicates that DOGE may not experience immediate price gains without external catalysts.

Given the current market conditions, it’s likely that Dogecoin will not experience significant declines in the near future. The coin may reclaim $0.164 as support and continue consolidating just below the $0.198 resistance. However, this consolidation could persist until stronger market cues emerge to push the price higher.

The only scenario in which this bullish-neutral outlook would be invalidated is if Elon Musk’s comment causes further damage to DOGE’s price. In that case, the meme coin could dip to $0.147, extending its recent losses. A sustained downturn would signal more negative sentiment in the market and potentially halt Dogecoin’s recovery.