Dogecoin Faces Risk of Falling Below $0.20 as 31% Rise Proves Speculative

Dogecoin has risen 31% in the past week, drawing attention from many investors due to the overall market optimism. The recent rally, driven by optimism and speculative trading, has pushed Dogecoin to trade at $0.22. However, this bullish trend is unlikely to be sustained for long due to the factors surrounding the rally and the potential for price correction. The Bullish Speculative Signal of Dogecoin Indicates a Reversal Dogecoin's current Network Value to (NVT) Transaction ratio is higher than the November 2024 bull run. A high NVT rate signals that the network's valuation exceeds its trading activity. This indicates that speculative sentiment has driven the recent rally more than strong fundamentals. While the NVT rate has increased in previous bull runs, it now indicates an unsustainable bull run. Unlike the rally in November 2024, when strong market fundamentals and significant trading activity supported the bull run, this recent bull run lacked the necessary foundation. This suggests that Dogecoin's current bull run is due to short-term market hype rather than long-term growth potential.

The recent rally of Dogecoin is also characterized by relatively low trading volume. This further reinforces the idea that this rally is speculative. In November 2024, the rally of Dogecoin was supported by significant trading volume of $10.27 billion at its peak. However, this week, although the network value has also increased similarly, Dogecoin only reached $1.2 billion in trading volume at its peak. The discrepancy between the bullish price and stagnant trading volume indicates that demand for Dogecoin is not keeping up with its recent price increase. This dissonance suggests that this rally is driven more by sentiment than by solid market interest.

DOGE price needs to consolidate support The price of Dogecoin is currently at 0.22 dollars after a 31% bullish in the past week. Although it remains above this important support level, the speculative nature of the rally suggests that the price may struggle to continue rising. Market conditions and a lack of solid demand increase the likelihood of a reversal. With the factors mentioned, Dogecoin is susceptible to bearish trends. If the price falls below $0.22, it may head towards $0.19 or $0.18, potentially losing the psychological support level of $0.20 in the process. This will confirm the bearish outlook and mark the end of the recent rally.

The only scenario in which the bearish argument could be invalidated is if the price of Dogecoin can bounce off the support level of 0.22 dollars. A recovery above 0.24 dollars would help restore investor confidence. However, currently, market signals indicate a price correction rather than an additional bullish movement.