- Dogecoin was deep in a retracement phase and could see further losses in the coming weeks
- Accumulation and undervalued signals from on-chain metrics meant investors might want to buy more DOGE
Dogecoin [DOGE] continued to suffer as the cryptocurrency market attempted to stabilize after the tumultuous end to the previous week. For its part, Bitcoin [BTC] established a pattern of experiencing a significant drop on Thursday or Friday, ranging over the weekend, and then beginning to recover on Monday, since 23 May.
After three weeks of the same pattern, Monday might bring more of the same. If that is the case, Dogecoin might be able to begin its recovery too. And yet, its price action was bearish at press time.
Source: DOGE/USDT on TradingView
The swing market structure was firmly bearish, and the price was below the 78.6% Fibonacci retracement level. These levels were plotted based on the rally in early May. DOGE saw a liquidity cluster at the local low at $0.17, and it may be likely that the price would dip to this level once again before recovery.
Some on-chain metrics suggested a potential buying opportunity, but the sustained selling on the OBV highlighted seller dominance.
Dogecoin gives buyers a green signal, but brace for volatility
The Network Value to Transactions Signal (NVTS) metric is a modification of the NVT ratio. The original metric uses the market capitalization and the daily on-chain transfer volume to understand if the asset is overvalued or undervalued based on its network utility.
The modified version uses the 90-day moving average of the daily transaction volume to help the NVTS function better as a leading indicator. At press time, the NVTS was below its May-June 2024 levels.
Hence, this could be a positive sign for investors since the memecoin was undervalued and presented a buying opportunity.
The exchange net position change turned negative in early June. It did the same earlier in the year in January. This could be a sign of accumulation as DOGE flowed out of exchanges and indicated that less Dogecoin was available for selling on exchanges.
However, negative net position change does not imply a rally is imminent. On the contrary, DOGE trended south for three months, despite the accumulation earlier this year.
Traders should remain cautious and expect a retest of $0.17 in the coming days, and potentially further losses. Investors can begin to look for buying opportunities and employ strategies such as dollar cost averaging.
