Dogecoin Price Plummets, Denting Recent DOGE Recovery

The price of DOGE has plummeted to a five-week low despite signs pointing to a slight recovery. But people in the know say that investors may have expected this outcome, as signals of a drop have been present for about a month.

As the time of writing, Dogecoin is trading at $0.071, marking a 6.3 percent decline in the past 24 hours. During trading, bearish sentiment increased significantly, dropping DOGE to a low of $0.069 at one point — a drop of almost 9 percent. Despite the slight recovery, DOGE still lost over 25% of its value last month.

Why Has the Price of DOGE Dropped?

While external market conditions may have affected DOGE’s price action, the increase in the Network Value to Transaction (NVT) ratio made the outcome rather predictable. This ratio measures a crypto’s market cap against its transaction volume and value settlement.

The NVT ratio helps investors assess whether the digital asset is overvalued or undervalued. Typically, high NVT values suggest overvaluation and may signal market tops or corrections. Low NVT values indicate the opposite.

The current NVT ratio for Dogecoin is at a five-month high of 163, which was last seen in December 2022 when DOGE failed to recover. The coin went on to experience another 21% slump the following week.

As the on-chain transaction value has now exceeded the altcoin’s value. However, some corrections could help address the discrepancy between the two.

This movement has caused concerns among investors, leading many to hold back from participating in the Dogecoin network, despite some positive figures in early April. By the end of the month, active addresses in the network dropped sharply from 142,000 to 117,000 within just 48 hours.

The last time the Dogecoin network had fewer than 120,000 active users was almost two years ago, in July 2021. This indicates that investors are now reluctant to participate in the network until they see some improvement in terms of price.

The corrections need to subside for the price to recover. This seems probable, as the Relative Strength Index (RSI) is approaching the oversold zone. This zone is typically associated with a period of recovery. If DOGE resides in it, the meme coin may experience some upward movement.

DOGE’s Memecoin Competition Begins to Circle

Although Dogecoin is still the most popular meme coin worldwide, other meme coins are on the up. Pepe (PEPE), Baby Doge Coin (BABYDOGE) and Dogelon Mars (ELON) have gained considerable market share over the past month. This has sent them into the top 10 memecoin rankings. It also suggests that these coins may make it into the mainstream, competing to take Dogecoin’s place as one of the most popular digital assets used at sites such as DOGE casinos and sports betting platforms.

The latest drop in daily active addresses indicates a negative price outlook for Dogecoin. DOGE hit its 2023 peak of $0.094 on April 19 before the recent surge of new meme coins. While the broader meme coin market continued to gain momentum, DOGE experienced a significant loss of 20 percent.

Recent on-chain data reveals that Dogecoin has been losing market share in the last three weeks. The Daily Active Users (DAU) on the Dogecoin network have declined since the latest price peak on April 15. The network’s DAU decreased by 41 percent, falling from 77,325 to 44,506 between April 19 and May 7. This is as per the on-chain data.

DAU metric tracks the number of unique wallet addresses engaging with a blockchain network. When the DAU metric persistently declines, it signals that the project is losing ground to competitors.

If meme coin investors continue to explore alternative assets, it could result in further downward pressure on Dogecoin’s price.