At the end of October, analyst Mike Fay had published a report titled “This Dog Wants to Run,” alluding to dogecoin (DOGE), the largest memecoin in the Cryptocurrency market.
As CriptoNoticias reported, a few days later, more precisely after Donald Trump’s victory in the United States presidential elections, DOGE skyrocketed and its price reached a high of $0.42.
However, the story took an unexpected turn, and the dog arrives at the end of 2024 exhausted, with its tongue hanging out and without the same energy as before. At least, that’s what their on-chain metrics show.
As can be seen in the following graph of TradingView, the price of the memecoin that pays tribute to a viral Internet dog fell below $0.30. Currently, its price is $0.31.
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DOGE quote from October to December 20, 2024. Source: TradingView.
“DOGE is up more than 240% in a few weeks, but recent metrics suggest gains may have peaked,” Fay notes in his most recent report.
To argue his point, the cryptocurrency market analyst proposes reviewing some on-chain metrics to analyze the reasons behind this price drop.
Among these metrics, the behavior of the daily rates of the Dogecoin network stands out, which In November they exceeded $550,000, representing a year-on-year increase of 330%. “However, after the initial increase in November, the trend in daily rates has fallen for almost five weeks, indicating a decline in usage,” Fay notes.
The following graph shows how the daily rates of the Dogecoin network decreased (blue bars) after reaching the peak mentioned by the analyst.
Daily transaction fees in Dogecoin (blue bars) and DOGE price (green line). Source: Token Terminal.
At the same time, it details that DOGE daily active addresses started to decline after the peak in late October. This is important because, according to historical patterns, every time the indicator rose, a price rise followed.
The drop in the number of active addresses is an indicator that There are fewer users participating in the network.
According to data from DeFiLlamaDogecoin’s total network value locked (TVL) plummeted from $9 million to $6 million.
Dogecoin TVL. Source: DeFiLlama.
For Fay, these metrics reflect a “fundamental weakness that gives strength,” and he also adds:
“We now face drops in rates, declines in active addresses, and prices that still remain near recent highs, despite the drop in network usage. I suspect the price will follow the same downward trend.”
Mike Fay, cryptocurrency market analyst.
On the other hand, Technical analysis also throws up important warning signs for investors. “DOGE price entered a “gap” between 20 and 36 cents, with clear bearish divergences and an RSI of 32, indicating room for further decline before any rebound. Furthermore, the 200-day moving average suggests a possible pullback to $0.17,” he comments.
The RSI (relative strength index) measures the strength and speed of price movement to identify whether an asset is overbought or oversold. Its value ranges between 0 and 100. If it is above 70, it is considered overbought, and below 30, oversold.
As seen in the following chart, the RSI reads 32, a level that generally It is interpreted as oversold in technical analysisbut has not yet reached an extreme point that suggests a possible immediate rebound.
DOGE’s RSI stands at 32. Source: TrendSpider.
DOGE has limited upside potential
Fay is not optimistic about the future of DOGE, highlighting that “it has very limited upside potential from this point (if any), due to increasing competition for liquidity in the memecoin segment.”
This competition, the analyst points out, is one of the main reasons behind the pressure on DOGE, especially in a context where there are currently 9 memecoins among the 100 most valuable assets on the market. According to data from CoinGecko, The market capitalization of memecoins reaches $103 billion.
Memecoins with the highest market capitalization. Source: CoinMarketCap
In relation to this phenomenon, Fay comments: “At one point in December, the memecoin segment had risen almost 400% for the year. Now, with 200% year-to-date gains, memecoins have given back almost half of their 2024 gains in just a couple of weeks, although they continue to lead the industry in terms of annual appreciation.”
Finally, he describes DOGE as a fantastic operation in October, but, according to on-chain data, he believes that “2025 will be very different from 2024” and completes: “If you made profits with this DOGE run, I would take them ”.
Clarification: This article is written for informational purposes. It does not constitute an investment recommendation or financial advice.
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