Dogecoin has experienced a notable surge of over 12% in the past day, but current trends indicated by on-chain analytics suggest potential bearish momentum may be on the horizon. This has raised concerns among observers about the sustainability of this upward swing.
In a recent analysis, there have been signs that investors in Dogecoin are exhibiting Fear of Missing Out (FOMO). The metric of interest is the “Total Amount of Holders,” which tracks the number of unique addresses holding a non-zero balance on the Dogecoin network. An increase in this metric typically indicates that new investors are entering the market or that previous holders are buying back in. Additionally, existing users might increase their number of wallets for privacy reasons. If the number of holders is rising, it suggests growing adoption of the asset.
Conversely, a decline in this metric could signal that some holders are liquidating their positions, possibly due to a lack of confidence in the cryptocurrency’s future. A broader analysis shows that while the overall number of holders for many cryptocurrencies has been rising, Bitcoin has seen a decrease in non-zero wallets. Specifically, Bitcoin has lost about 211,500 addresses compared to three weeks ago, bringing the total to approximately 54.38 million. This suggests that some investors may doubt the longevity of the current rally and have chosen to exit at recent price levels.
Historically, the cryptocurrency market has shown an inverse relationship between investor sentiment and asset prices. Typically, prices rally during periods of Fear, Uncertainty, and Doubt (FUD), while they tend to decline when investor enthusiasm reaches a peak, as seen with recent trends in Dogecoin. In the last week alone, the network has seen approximately 46,400 new addresses, indicative of speculative trading behaviors around meme coins. However, such rampant optimism may not bode well for Dogecoin’s future price trajectory, raising questions about whether this recent bullish activity can be maintained.
As of now, Dogecoin has broken the $0.168 level amidst this rally, but the prevailing sentiment hints that the momentum may not be sustainable.
