Dogecoin Price Analysis – Yahoo! Finance Gives DOGE A Bone

Dogecoin (DOGE) was based on the Shiba Inu meme, and released on December 6th, 2013, making it one of the oldest coins in existence at 4.8 years old (or 33.6 in DOGE years). DOGE has an available coin supply of 116.12 billion, one of the highest among all coins, and a market cap of US$756 million, currently ranking 20th, with US$67.92 million in trade volume over the past 24 hours. Price has declined 65% from the all time high in January, when the market cap briefly broke US$2 billion, but it has been the best performing currency over the past week after a 30% surge.

DOGE emerged out of an effort to increase cryptocurrency adoption, understanding, and awareness. The project was created by Billy Markus, with the help of Jackson Palmer who left the project in 2015. Notable efforts by the DOGE community include; raising US$50,000 to send the Jamaican bobsled team to the Sochi Winter Olympics, raising US$30,000 for World Water Day, and raising US$55,000 to sponsor NASCAR driver Josh Wise.

DOGE is based on the Scrypt PoW coins Luckycoin and Litecoin, has a fixed block reward of 10,000DOGE, and one minute block times with no limit on total coin creation. Inflation is currently ~1.2%. The DOGE block height is currently above 2,388,292 and four entities control over 50% of the mining power.

After security concerns revolving around the potential of a 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 algorithm to be mined simultaneously. According to Lee, "[It] doesn’t merge the blockchains, the clients, economics of the coins, the dev team, or the communities. All it does is make it so that you mine both coins at the same time, and secure both coins at the same time."

DOGE transactions per day, which are closely related to daily active addresses, spiked significantly in late August. DOGE has consistently had more transactions per day during 2018 when compared to ZEC, XMR, DASH, BCASH, or LTC. Average transaction fees have also increased recently but remain near US$0.01, and have been consistently lower than DASH, XMR, LTC, ETH, and BTC. DOGE also reached a new record high for transactional volume (not shown), US$1.316 billion on September 7th, higher than that of ETH and nearly matching BTC.

The Kalichkin network value to estimated on-chain daily transactions (NVT) ratio (line, chart below) has been ranging wildly over the past few months. Inflection points in NVT can be leading indicators of an asset’s value reversing. A clear downtrend in NVT suggests a coin is undervalued based on its economic activity and utility, which should be seen as a bullish price indicator.

Daily active addresses (fill, chart below) recently hit a four year high, suggesting a large uptick in network participants. According to Metcalfe’s Law, the value of a network is proportional to the square of the number of connected users of the system. An increase in active addresses, which can be used as an adoption metric, should be seen as a leading indicator of bullish price action.

There has been very little GitHub activity on DOGE since October 30th, 2015, with only two commits in the last year. 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.

Although development appears stalled, there are plans to bring DOGE up to date with a 1.14 version, currently in alpha, which includes various fixes as well as BTC and LTC protocol advancements.

DOGE exchange traded volume has been dominated by the Tether (USDT), Bitcoin (BTC), and Ethereum (ETH) pairs over the past 24 hours. The top volumes by exchange include the Chinese exchanges ZB.com and BitForex.

Over the past few months, DOGE has seen a flurry of exchange and transaction interest. DOGE trading went live on Robinhood, a popular retail trading app, on July 16th and the Yahoo! Finance app on August 31st. Robinhood has a reported four million user accounts while Yahoo! Finance has a reported 70 million unique visitors each month.

Poloniex and Bittrex added a DOGE/USDT trading pair on August 31st and September 5th, respectively. DOGE is also on the short list of potential coins for the Coinbase Custody program. A Change.org petition has also been launched to encourage DOGE payments on Amazon.

Technical Analysis

DOGE has recently experienced a large jump in price as almost every other cryptocurrency has fallen substantially. To better assess whether or not a large price jump has staying power, chart patterns, exponential moving averages (EMAs), Ichimoku Cloud, and divergences can be used. Further background information on the technical analysis discussed below can be found here.

Historically, DOGE was completely devoid of fiat markets and trading was dominated by the BTC pair. The recent injection of several new fiat pair listings is, more than likely, directly responsible for the rise in price. Like the BTC/USD pair (right panel, chart below), the DOGE/USD pair has been confined to a falling wedge throughout most of the year. The chart pattern carries a bullish bias and typically breaks North after completing 60% of the triangle. Furthermore, price broke above the 200 daily EMA, suggesting decisive bullish momentum. This sits in stark contrast to the BTC/USD pair which reversed at the 200 daily EMA.

On the weekly DOGE/BTC chart, the local highs typically occur every ~230 days, reaching 100 sats, consolidate for two weeks, and then dropping lower. This cycle has occurred five times, including the extended 2016-2017 decline into a multi-year high almost reaching 200 sats. The Ichimoku Cloud, which illustrates support and resistance zones, has painted resistance at the ~100 sat horizontal level, suggesting price is unlikely to move higher without consolidation.

On the daily chart, price moved above Cloud resistance on August 31st, also known as a Kumo breakout or bullish trend shift. A bullish 50/200EMA cross, known as the Golden Cross, occurred a few days later. The latest higher high in price occurred on less volume and less bullish momentum, as seen on RSI. This is known as a bearish divergence and suggests waning bullish momentum with a likely pullback to 50% of the range, or ~70 sats.

Finally, on the daily DOGE/ETH pair, price has reached a new all time high, with stratospheric bullish momentum, as shown by a 94 print on RSI. A Kumo breakout on August 29th with a first-ever 50/200EMA golden cross a few days later foreshadowed further upside. The pair currently has a bearish RSI and volume divergence suggesting a 50% retracement.

Conclusion

After almost being left for dead in 2014, DOGE was saved by a merged mining initiative with LTC. The coin which was created as an experiment and flash-in-the-pan joke has stood the test of time due to its enduring position as a mascot for the community. Although dedicated protocol development has been dead for years, there has been a resurgence in DOGE development, seen by many as a breathe of fresh air in this ICO soaked environment. DOGE continues to serve as an important gateway and playground for the cryptocurrency curious.

Technicals suggest that opening previously untapped fiat gateways has had a profound effect on DOGE. Historical support and resistance suggests that any purchase made near 20sats are an excellent sell at 100sats. Every rise in DOGE’s history was unable to consolidate for further upside, leading to a prolonged 200+ day downtrend, and should currently be a strong sell for that reason.