Dogecoin Sees Surge in New Demand, Price Lags Behind

Leading meme coin Dogecoin [DOGE] has witnessed a surge in demand in the last week. In a post on X (formerly Twitter), crypto analyst Ali Martinez noted that the coin has seen a surge in network activity, with the creation of new addresses reaching record highs.

#Dogecoin is experiencing a notable network expansion! There’s a steady rise in the creation of new $DOGE addresses, consistently reaching new highs.

This increase in network activity is a promising sign for #DOGE as it lays the groundwork for a potential upward price action. pic.twitter.com/WcWxRY6ZGU

— Ali (@ali_charts) December 23, 2023

In the last seven days, the dog-themed coin recorded a 31% growth in the daily count of new addresses created to trade it.

When an asset records an uptick in the creation of new addresses, it means that there is high demand for it by new market participants. It is often followed by a rally in the asset’s value.

Predicting that the same might play out in DOGE’s case, Martinez stated:

“This increase in network activity is a promising sign for #DOGE as it lays the groundwork for a potential upward price action.”

Not enough demand

Despite the growth in the count of new addresses that have traded DOGE in the last week, the coin’s price continues to oscillate within a narrow range.

DOGE/USD 24-Hour Chart (Source: TradingView)

At press time, the altcoin traded at $0.09312. According to readings from its price movements observed on a daily chart, DOGE’s price has oscillated between the $0.089 and $0.095 price marks in the past seven days.

Due to the coin’s narrow price movements, buying momentum has plummeted among spot market participants. An assessment of DOGE’s key momentum indicators confirmed this decline.

For example, the altcoin’s Money Flow Index (MFI) rested below its center line at 39.80 at press time.

An MFI value below 50 suggests a weakening buying pressure in the market. It means that sellers are gradually gaining control over the market, as there is a relatively low level of buying activity compared to selling activity.

Likewise, poised to cross below its center line, DOGE’s Relative Strength Index (RSI) was 52.94 as of this writing. This also suggested that DOGE traders favored coin distribution over accumulation.

Further, its Chaikin Money Flow (CMF), at -0.05, was spotted below the zero line. It is trite that a CMF value below zero is a sign of weakness in the market.

At 0.05, DOGE’s CMF signaled that relatively low liquidity flowed into the DOGE market at the time of writing. This has been known to put downward pressure on an asset’s price, as it means that the market is not flush with the capital required to drive a price rally.

Confirming the downtrend in the DOGE market, its Parabolic SAR (Stop and Reverse) indicator was above its price and has been positioned that way since 12 December.

This indicator is used to identify potential trend direction and reversals. When its dotted lines hang above an asset’s price, it means that the market is in a downtrend. Many traders interpret it as the time to exit long positions or initiate short positions.

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