- Dogecoin has not broken out of its long-term downtrend
- Falling on-chain activity and the rising NVT Signal were discouraging signs for investors
Dogecoin [DOGE], at the time of writing, was slowly climbing back towards the $0.166-level that it began the month of April at. In fact, this level is still an active resistance level, with DOGE bulls facing rejection on 13 April.
Source: DOGE/USDT on TradingView
The memecoin has been on a sizeable downtrend over the past few months.
The price bounce from the long-term support at $0.143 was a minor development. And yet, on-chain metrics suggested that DOGE might be overvalued already.
Signs that Dogecoin may be trading at a premium
Source: Glassnode
The Network Value to Transactions Signal (NVTS) is a modified version of the NVT metric that uses the 90-day moving average of the transaction volume, instead of the daily transfer volume.
The idea is to make the ratio more responsive to an overextended asset when its market cap growth rapidly eclipses the asset’s utility (the 90-day transfer volume). Hence, an uptrend in the NVTS means that investors may be valuing DOGE at a premium.
In the past four years, there have been periods when the price has trended south or sideways, and the NVTS trended higher. It reflected depressed on-chain activity for Dogecoin at press time. To put it simply, it is not something investors would want to see during a price downtrend.
Source: Santiment
At press time, the 180-day MVRV was deeply negative too, showing holders of the past six months at a sizeable loss. Over the past six weeks, both the transaction count and the daily active addresses count dropped slightly too.
The falling transaction count might also help explain the rising NVTS. The dormant circulation saw a couple of spikes on 9 and 15 April, showing a flurry of token movement near the local DOGE lows. This likely hinted at capitulation from holders.
The rising NVTS and falling transfer volume and count, together, are a bearish sign for long-term investors. Reduced demand for the memecoin and holders at a high loss reflected the deep bearish sentiment behind DOGE. Even as it tried to break past its local resistance levels.