Dogecoin is down by 6.87% in the past 24 hours after a brief cooldown in bearishness. However, the downturn has given Dogecoin a hint of bullish reversal as it has entered a historically prominent buy zone. Interestingly, this is suggested by the MVRV ratio, which currently hints at a very bullish short-term bounce for DOGE.
DOGE’s 30-day MVRV clocking in at -13%, the king of meme coins looks attractively priced for traders eyeing a fresh entry. This is because historically, ratios around this range have preceded rallies and served as the best buying zones.
Dogecoin Price Enters Opportunity Zone
MVRV stands for Market Value to Realized Value. It’s a metric that compares the current market cap of a crypto asset to the realized cap, i.e., the total amount paid for the coins currently in circulation. In simple terms, MVRV shows whether an asset is overvalued or undervalued relative to its fair value. A high ratio signals potential overvaluation, while a low or negative ratio hints at undervaluation and buying opportunities.
Historically for Dogecoin, an MVRV ratio between -8% and -20% has always presented the start of price recoveries. In the past, these periods of negative MVRV were followed by significant price rallies. An example of this occurred not too long ago when the price of DOGE dropped by 31% between March 14 and March 20, resulting in the MVRV ratio falling to -15%.
However, the meme coin reversed course shortly after and went on a 78% price surge peaking at $0.2262 on March 28. Currently, the 30-day MVRV ratio is at -13% after weeks of bearish price action. Interestingly, the drastic price decrease even saw the MVRV falling to a low of -16.7% in the past seven days, according to Santiment data.
What’s Next For DOGE Price?
At the time of writing, Dogecoin is trading at $0.1168 and is on a 12.30% decline in the past 24 hours. Going by the MVRV ratio alone, we could actually witness DOGE rebounding to the upside very soon. While this doesn’t guarantee an imminent bounce, it aligns with phenomenon that led to Dogecoin rallies in the past.
According to data from IntoTheBlock, DOGE is currently positioned above a significant on-chain support level. Per the In/Out of the Money metric, Dogecoin is now sitting in a strong support zone where 41.81 billion DOGE tokens were acquired by investors at an average price of $0.106. This demand zone could prove to be very important if DOGE were to extend its current price decline and fall below $0.11.
Featured image created with Dall.E, chart from Tradingview.com
