Despite an uptick in dogecoin network activity last month, the value of the popular meme coin, Dogecoin [DOGE], has not experienced a corresponding rise. On-chain data provider, IntotheBlock, reveals that over 45,000 daily active addresses were involved in dogecoin transactions last month, an impressive figure that unfortunately did not fuel an increase in the coin’s price.
Network Activity and Price Correlation
Normally, an asset’s price tends to rise following a surge in its network activity. This is due to the fact that increased activity typically signifies heightened interest in the asset. However, this trend seems to have skipped DOGE. One possible explanation for the dogecoin price decline despite the spike in network activity could be its positive correlation with Bitcoin [BTC], the leading cryptocurrency.
Bitcoin’s price fell by 12% last month amid severe market volatility, which could have contributed to DOGE’s near 10% decline in the same period. At the time of writing, DOGE was trading at $0.06406, according to CoinMarketCap data.
The Role of Transaction Volume
DOGE’s correlation to BTC is not the only factor at play in its price slump. The number of completed dogecoin transactions has also been on a downward trend since the end of July. IntoTheBlock’s data shows an 89% drop in DOGE transactions from the end of July to mid-August, falling from 739,830 to 79,150.
Interestingly, the number of large transactions, also known as ‘whale transactions’, experienced a significant decrease. Transactions valued between $100,000 and $1 million fell by 21%, and those between $1 million and $10 million dropped by 46%. Most notably, transactions exceeding $10 million completely disappeared, according to IntoTheBlock.
Future Market Indicators
A look at DOGE on the dogecoin futures market suggests that the coin’s price could be at further risk of decline. Santiment reports that DOGE’s Open Interest has been on a downward trend since mid-August, with a nearly 50% drop in the past five days. Additionally, negative funding rates on leading exchanges dYdX and Binance indicate that traders are betting against a price increase for DOGE. This could add to the dogecoin price risk and potentially exert further downward pressure on the coin’s price.
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