Dogecoin saw an 11% drop last week, but this decline may not continue as DOGE is now just above a major support block on the network.
Dogecoin is now just above a major demand zone on the network
According to data from the market intelligence platform Inside the block, DOGE is currently above a significant demand zone on the network. In on-chain analysis“Demand zones” refer to price ranges in which many investors buy their coins.
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These zones are determined using blockchain data; The average price at which an address receives deposits is considered its cost base. Below is a chart that shows how close to current Dogecoin price levels are based on how many addresses share their cost base with them.
In the graph, the size of the dots corresponds to the number of addresses that purchased their coins within the respective range. It appears that the $0.096 to $0.139 range currently appears to be the highest Dogecoin price range in terms of this metric.
More specifically, 409,330 addresses purchased a total of 45 billion DOGE within this range. Now, what is the relevance of this demand zone, or any other, in this sense?
Generally, the cost basis is an important level for any investor, so they may be more likely to show some reaction when the cryptocurrency’s spot price is retested.
Some investors showing this reaction would not naturally be relevant to the broader market. Still, if many of them share their cost base within the same narrow range, then a retest could produce a big reaction for the price to feel its effects.
The demand zone around the average price of $0.115 has caused many addresses to purchase their coins there, so its retest could be significant for memecoin.
Since the current price of Dogecoin is above this range, these investors who bought within the range would make some profits. Historically, these below-price demand zones have functioned as staging points. support for cryptocurrency.
This is because investor psychology tends to work out so that those holders who were in profits before the retest may believe that the price would rise again so that they could decide to buy more assets.
On the other hand, investors in the red ahead of the retest could fuel the cryptocurrency resistance because they sell in fear that the price will fall again. “On the upside, DOGE may face resistance around the $0.16 level, where 20 billion DOGE is currently held at a loss,” notes IntoTheBlock.
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It remains to be seen whether the on-chain demand zone below would help halt memecoin’s decline if its price drops enough to test it again.
DOGE Price
Last week was a bad time for Dogecoin investors as the asset’s price fell by around 11%. Following this reduction, DOGE is now trading around $0.142.
Featured image from iStock.com, IntoTheBlock.com, chart from TradingView.com