Dogecoin Price Analysis – Active addresses, fees, and Google Trends hit new all-time highs
In early February, transactions per day hit a new multi-year high. Over the past few years, DOGE has had more transactions per day than Monero (XMR), Dash (DASH), and Zcash (ZEC).
Dogecoin (DOGE) has an available coin supply of 128 billion, which is among the highest-circulating supplies of all coins. The coin ranks 16th on the Brave New Coin market cap table, with a market cap of US$6.36 billion with US$1.02 billion in trade volume over the past 24 hours.
Based on the Scrypt Proof-of-Work coins Luckycoin and Litecoin, DOGE has a fixed block reward of 10,000 DOGE, and a one-minute block time with no limit on the total number of coins created. The DOGE block height is currently above 3,612,228 and inflation is currently 3.88%. The chain also has 884 nodes currently, most of which reside in the U.S. and Germany, and 72% of which are running the most recent version 1.14.2.
Source: CoinMetrics
After security concerns revolving around a potential 51% attack in 2014, the creator of Litecoin (LTC), Charlie Lee, proposed a merged mining solution for DOGE and LTC. Merged mining allows for cryptocurrencies with the same consensus algorithm to be mined simultaneously. After the LTC block reward halving in August 2019, the DOGE hash rate also declined. In early 2020, the hash rate increased from the April lows, just as Scrypt ASICs became profitable once again with an electricity cost of US$0.04 per kWh.
A rise in hash over the past few months may also be related to a recently discovered botnet called Doki. According to security researchers Intezer, the Linux mining malware “uses a previously undocumented method to contact its operator by abusing the Dogecoin cryptocurrency blockchain in a unique way in order to dynamically generate its command and control domain address.”
Source: BitInfoCharts
Source: asicminervalue
DOGE transactions per day (line, chart below) have largely ranged from 20,000-50,000 since December 2017. In early February, transactions per day hit a new multi-year high. Over the past few years, DOGE has had more transactions per day than Monero (XMR), Dash (DASH), and Zcash (ZEC). Average transaction values (fill, chart below) had declined significantly since January 2019 but now hold near US$30,000.
On January 29th, 2021, DOGE reached a record high US$1.43 billion in on-chain daily transaction volume, surpassing most other altcoins that day. Average transaction fees on the chain had consistently been lower than BTC, LTC, BCH, XMR, ZEC, and Ethereum (ETH) (not shown). Average transaction fees are currently US$0.22, a substantial increase over the past few months.
Source: CoinMetrics
Source: CoinMetrics
The 30-day Kalichkin network value to estimated on-chain daily transactions (NVT) ratio (line, chart below) is currently 90 and rising. An NVT below 30 would likely indicate organic and sustained bull market conditions. Inflection points in NVT can be leading indicators of a reversal in asset value. An uptrend in NVT often suggests a coin is overvalued based on its economic activity and utility, which should be seen as a bearish price indicator, whereas a downtrend in NVT suggests the opposite.
Active and unique addresses are important to consider when determining the fundamental value of the network based on Metcalfe’s law. Monthly active addresses (MAAs) are currently 100,000 (fill, chart below), marking a new multi-year high. A continued and sustained increase in MAAs would suggest bullish price action. DOGE currently has more MAAs than Zcash (ZEC) and Ripple (XRP).
Source: CoinMetrics
The market cap divided by the realized cap (MVRV) is another crypto-native fundamental metric used to assess overbought or oversold conditions. Realized cap approximates the value paid for all coins in existence, by summing the market value of those coins at the time they last moved on the blockchain.
Historically, periods of an MVRV less than one have represented buying opportunities, whereas periods of an MVRV greater than three have represented selling opportunities. All three MVRV levels above three have represented local highs in price. Currently, MVRV is 3.00 and falling, suggesting the spot price is currently in overbought territory.
Source: CoinMetrics
Turning to developer activity, DOGE has seemingly had very little dev activity over the past few years, with seven repos and just eight commits on the main Github repo in the past year. According to several Dogecoin devs, work is not done on the master branch, therefore commits are not visible.
Dogecoin Core v1.14.2 was released via a soft fork in November 2019, and, 2018 through 2019 saw nine full releases. Dogecoin Core v1.17 is currently a work in progress. The most recent protocol upgrade brought improved validation speed and network propagation performance, leading to much shorter sync and initial block download times.
Dogecoin Core 1.14 also introduced a version four soft fork, which activated on block 3,465,058. This upgrade adds the OP_CHECKLOCKTIMEVERIFY operational code, allowing for temporarily locking the spending of a transaction output, preventing coins to be spent until a specific time in the future.
Most coins use the developer community of GitHub, where files are saved in folders called “repositories” or "repos," and changes to these files are recorded with “commits.” Although commits represent quantity and not necessarily quality, a higher number of commits can signify higher dev activity.
Source: Github – dogecoin/dogecoin
Worldwide Google Trends data for the term "Dogecoin" spiked to an all-time high in January 2018, mirroring a local high in price at that time. A slow rise in searches for "Dogecoin" preceded both highs in September 2019 and March 2019, likely signaling interest from new market participants at that time. Overall, searches for “Dogecoin” have been low over the past two years until recently when the coin was mentioned by several popular influencers on TikTok and celebrities on Twitter. A 2015 study found a strong correlation between the Google Trends data and BTC price, while a May 2017 study concluded a dramatic rise in the U.S. Google "Bitcoin" searches correlated with a drop in BTC price.
Technical Analysis
Historically, the DOGE/BTC spot price has been held within a range of 13 sats to 100 sats since 2014. Over the past few weeks, an onslaught of new buyers briefly pushed the spot price to above 200 sats. Going forward, the Volume Profile Visible Range, pivot points, Oscillators, Bollinger Bands, Ichimoku Cloud, and Exponential Moving Averages can be used to help assess potential support levels. Further background information on the technical analysis discussed below can be found here.
On the weekly DOGE/BTC chart, RSI briefly tapped an all-time high of 94 before the violent rejection of multi-year price highs. VPVR and yearly pivots show little support until 75 sats. Once a definitive price top on the pair has formed, a multi-week slow-bleed back to 40 sats has been the most likely outcome. Longer term buyers are unlikely to step in until the spot price reaches this critical support level.
Turning to the Ichimoku Cloud, four metrics are used to determine if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, and the Lagging Span. The best entry always occurs when most of the signals flip from bearish to bullish, or vice versa.
Cloud metrics on the weekly DOGE/BTC chart, with doubled settings (20/60/120/30) are bullish, for the first time since 2017. The spot price is above the Cloud, the Cloud is bullish, the TK cross is bullish, and the lagging span is above Cloud and above price. Cloud support currently stands at 66 sats.
The weekly DOGE/USD chart also shows bullish Cloud metrics for the first time since 2018. Kijun support currently sits at US$0.047
On the four-hour DOGE/USD chart, trend metrics are neutral with price above the 200-period EMA but inside of the Cloud. Price remains above the yearly pivot and psychological support of US$0.05. Relatively little VPVR support is present until the psychological level of US$0.01. Any further long entries would not be warranted until a bullish Kumo breakout above the Cloud with a bullish TK cross.
Conclusion
After almost being left for dead in 2014, DOGE was saved by a merged mining initiative with LTC. The coin was created as an experiment and flash-in-the-pan joke, but has stood the test of time due to its enduring position as a mascot for the crypto community. As such, DOGE continues to serve as an important gateway and playground for the cryptocurrency curious. Protocol development also remains strong with nine full releases over the past two years.
In July 2020, The DOGE/BTC spot price had been range-bound for over a year and was poised for a breakout. DOGE was then mentioned as a buying opportunity by several TikTok influencers, quickly propelling the spot price over 100% in three days. Mentions by Elon Musk and other celebrities have propelled DOGE a further 1,600% since January.
Since 2014, every price spike above 100 sats has been unable to consolidate or make further gains, leading to a prolonged 200+ day downtrend. In the near term, a move below US$0.05 should be seen as a leading bearish momentum indicator. However, if the spot price is able to resolve the current consolidation in a bullish manner, a move to the yearly pivots of US$0.10 and US$0.15 is highly likely. On the DOGE/BTC pair, buyers are unlikely to step in until the spot price bleeds below 40 sats, a historical low-risk, high-reward long entry zone.
Brave New Coin reaches 500,000+ engaged crypto enthusiasts a month through our website, podcast, newsletters, and YouTube. Get your brand in front of key decision-makers and early adopters. Don’t wait – Secure your spot and drive real impact in Q4. Find out more today!