Doge Price Has Dropped Recently, Is It Really Preserving a Bullish Moment?

DOGE/USDT has experienced a notable cooldown, with a decline of over 13% in the past week. This follows a period of strong performance where the token saw a rally of 31% over the last three months. 

Despite this recent drop, which might seem concerning on the surface, a deeper Doge price analysis reveals that this consolidation phase could be more complex than it appears. A combination of technical and on-chain indicators suggests that underlying strength may be building, potentially positioning Dogecoin for a continued uptrend. 

This analysis will explore these signals to provide a nuanced perspective on the current Doge price prediction and determine if this is indeed a significant Doge bullish moment in the making.

On-Chain Data: Short-Term Holder Capitulation Meets Strong Support

A key area of analysis lies in Dogecoin's on-chain data, which provides a window into the behavior of its holders.

A metric known as the short-term holder Net Unrealized Profit/Loss (NUPL) tracks the profitability of wallets that have held Dogecoin for less than 155 days. These wallets typically belong to the most reactive market participants.

Source: Glassnode

Following the price drop from its late-July highs, the short-term holder NUPL fell sharply from 0.24 on July 20 to 0.06 by July 28. 

This significant decrease indicates that many recent Dogecoin buyers have either sold their holdings for small profits or are now experiencing minor losses. Such a shakeout of "weak hands" is a common event during market corrections.

However, this wave of selling appears to have met a strong support level. 

The Dogecoin cost basis heatmap, which visualizes the average acquisition price for different groups of wallets, shows a massive concentration of Dogecoin near the $0.21 level. 

Over 9.77 billion DOGE are held at this price point, suggesting that a large number of investors are likely to defend this support level. Historically, such zones have often acted as a price floor during periods of correction. 

This dynamic, where emotional selling from new entrants is absorbed by established holders, creates a solid foundation for a potential bullish reversal.

Read also : How to Buy Dogecoin (DOGE) on Bitrue Exchange

DOGE Technical Analysis: The Hidden Bullish Divergence

Beyond on-chain data, a crucial technical signal is a hidden bullish divergence on the Relative Strength Index (RSI). 

The RSI is a momentum indicator that measures the speed and change of price movements. Typically, in an uptrend, both the price and RSI move together. 

Source: ananda_banerjee 

However, a hidden bullish divergence occurs when the price forms a higher low, while the RSI forms a lower low.

Is It Time to Buy The Dip for DOGE?

In recent days, the Doge price has been forming higher lows, which is a sign that buyers are entering the market at higher prices during dips. 

Concurrently, the RSI has been showing lower lows, which indicates that while the momentum of the price movement has cooled off, the overall price structure remains intact. This divergence suggests that the selling pressure is diminishing, not gaining strength.

This type of divergence often appears during periods of consolidation or pullbacks within a larger uptrend. 

30% Drop is the Consolidation Phase for DOGE?

Given that Doge price today is still up over 30% in the last three months, this signal reinforces the idea that the recent drop is a consolidation rather than a full-blown bearish reversal. 

When viewed in conjunction with the on-chain data showing a capitulation of short-term holders and strong cost basis support at $0.21, this technical setup provides a strong case for a Doge bullish moment and a potential continuation of the upward trend.

Navigating Key Price Levels for DOGE Price Prediction

For the bullish scenario to fully materialize, the Doge price needs to hold a few key levels. According to technical analysis, Dogecoin is currently trading just below the $0.23 mark, positioned between the 0.382 and 0.5 Fibonacci retracement levels. 

Source: ananda_banerjee 

For the optimistic narrative to play out, the price must successfully hold above the $0.21 support level and, more importantly, reclaim the $0.25 resistance level.

A successful breakout above $0.25 would open the door for a potential rally towards the next resistance at $0.28. 

However, should the strong support at $0.21 fail, the bullish thesis could be invalidated, and the price might decline to test lower levels around $0.19 or even $0.17. 

Despite this risk, the on-chain data firmly points to the strength of the $0.21 level as a robust support floor.

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Conclusion: Is This a Doge Bullish Moment?

In summary, while the recent drop in the Doge price may have shaken out some short-term holders, a combination of compelling on-chain and technical signals paints a potentially optimistic picture. 

The capitulation of recent buyers has been met with solid structural defense at the $0.21 cost basis level. This is further complemented by a hidden bullish divergence on the RSI, which suggests that selling pressure is waning and the token's underlying uptrend remains intact.

For the bullish case to be confirmed, investors should monitor for the price to hold above $0.21 and break through the key resistance at $0.25. 

The recent consolidation appears to be a necessary part of a larger market cycle, and while volatility is to be expected, the data suggests that this could indeed be a significant Doge bullish moment preceding a continuation of its recent rally.

FAQ

Has the Doge price dropped recently?

Yes, the Dogecoin price has slipped more than 13% over the past week, following a strong 31% rally in the last three months.

What on-chain signals suggest a potential "bullish moment" for Dogecoin? 

On-chain signals include short-term holders capitulating after the drop, while strong cost basis support holds firm near the $0.21 price level.

What technical signal points to a potential bullish continuation?

A hidden bullish divergence on the Relative Strength Index (RSI) suggests that sellers are losing momentum, even as the price forms higher lows, which is a key signal for a potential uptrend.

What price level does Dogecoin need to hold to confirm the bullish scenario? 

For a bullish continuation to play out, the Doge price needs to hold above the key support level of $0.21 and reclaim the resistance at $0.25.

What could happen if the $0.21 support level breaks? 

If the $0.21 support level breaks, the bullish thesis would be invalidated, and the price could potentially drop to test lower levels around $0.19 or $0.17.