The price of Dogecoin (DOGE) has remained in the $0.072 to $0.075 range for the past three weeks despite the recent hype surrounding DRC-20 Ordinals, which caused transaction volumes to experience an unprecedented surge. However, on-chain data suggests that this hype might undermine the chances of a bullish price breakout for DOGE.
On May 22, 2023, the daily transactions on the Dogecoin (DOGE) blockchain network reached a record high of 1.3 million. Nonetheless, the DRC-20 Ordinals hype has had little impact on DOGE price prospects, as indicated by on-chain data.
The continuous rise in Dogecoin transaction fees might trigger a more negative DOGE price prediction.
Dogecoin Price Remains Stagnant Despite Spikes in Transaction
Despite Dogecoin’s growing network activity, the price of DOGE has remained relatively unchanged. The chart below shows that while the network activity rose by 1400% from 88,450 transactions on May 14 to 1.35 million transactions on May 22, DOGE’s price hovered around $0.073 during this period.
The Transaction Count represents the total number of transactions that occur on a blockchain network during a specific trading period. Historically, Dogecoin price has increased whenever there is a sustained spike in transactional activity. Thus, the negative divergence between Price and Transaction Count raises concerns and might imply that the new DRC-20 Ordinals transactions taking up valuable block space do not add material economic value to the network.
Whales are Turning Away From Dogecoin
A major criticism of Ordinals by Bitcoin maximalists is the unintended consequence of rising network fees. This phenomenon also appears to be affecting the Dogecoin network. From May 10 to May 22, the average transaction fees on the Dogecoin network increased three-fold. Total Fees aggregate the total amount users spend to transact on a blockchain within a given period. When transaction fees rise, it dissuades users from carrying out transactions leading to a drop in network traction and ultimately a price decline.
Large Transactions on the Dogecoin network began to decline from May 13, a period that coincides with the spike in DRC-20 Ordinals transactions, indicating that whale investors are conducting fewer transactions due to relative network congestion and fee spikes caused by the “Doginals”.
Whale transactions provide much-needed liquidity to any cryptocurrency’s price prospects. Therefore, if the circumstances remain unchanged, DOGE’s price might enter another downward spiral in the coming days.
DOGE Price Prediction: The $0.07 Support is Critical
According to IntoTheBlock’s In/Out of the Money Price distribution data, the bears will likely force a DOGE price downsizing to $0.07. However, the 56,870 addresses that bought 853 million DOGE tokens are expected to offer considerable support at the critical $0.07 zone. If the support at $0.07 fails as expected, the DOGE price would likely slump further toward $0.062.
The bulls can negate this pessimistic narrative if the DOGE price breaks out above $0.078. Nevertheless, some of the 43,530 investors who purchased 28.9 billion coins at the maximum price of $0.078 range could resist. This significant cluster of possible break-even sellers could easily stall any price movements higher while representing a massive resistance zone. If that resistance level fails, the DOGE bulls can expect the price to climb to $0.085.
Disclaimer
This article about price analysis is for informational purposes only and should not be considered financial or investment advice. Bitrabo is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct personal research and consult a professional before making any financial decisions.
