Dogecoin Defends Key Zone, Gains 4.84% Amid Bearish Trend

Dogecoin has been on a steady downtrend over the past five weeks, with the price falling below May’s low on 20 June. The leading memecoin erased the 58% rally it made in the second week of May, indicating a bearish trend. However, there are signs that the $0.21 level may be key for a potential reversal.

According to a recent report, the gains made in April and May could just be the prologue before a parabolic rally. The exchange netflows metric has been negative over the past two weeks, which is a sign of DOGE accumulation. This suggests that despite the recent downturn, there is still interest in Dogecoin and potential for a price recovery.

Dogecoin holders need not panic yet, as the latest coin days destroyed (CDD) uptick is not yet a sustained trend. This metric reflects the amount of old coins being transacted and indicates selling pressure. However, the current uptick is not as significant as previous trends, suggesting that there may not be persistent distribution on-chain. This means that there is still potential for a recovery in the near term.

The cost basis distribution (CBD) heatmap shows that the $0.182-$0.211 area had three distinct bands of supply. These bands tried and failed to hold back the DOGE bears, which means that if Dogecoin recovers, fearful holders might choose to exit at break-even at these levels. This could make a stronger recovery tougher, but it also indicates that there is potential for a price increase if the $0.21 level is flipped to support.

Dogecoin has been defending a key demand zone between $0.142 and $0.160, which has historically sparked buying activity. This zone has been crucial since November 2024, and its defense has been pivotal in preventing further price declines. The current price of Dogecoin stands at $0.154, marking a notable 4.84% gain. This recovery follows a two-month low of $0.142, which was reached over the weekend as most crypto prices crashed. The defense of this demand zone has been significant, as it has held strong during previous market downturns, including in March and April when bulls successfully defended support, leading to substantial price recoveries.

The 30-day Market Value to Realized Value (MVRV) ratio for Dogecoin signals that a bottom could be in, as most recent buyers are holding unrealized losses. This metric, which has declined to -15.43%, indicates that traders who purchased Dogecoin in the last 30 days are sitting on significant losses. A negative MVRV ratio suggests that a majority of Dogecoin holders are now sitting on losses, and they could become less willing to sell until they break even. This, combined with the seller exhaustion depicted by the Relative Strength Index (RSI), supports the thesis for a bullish Dogecoin price forecast.

If history rhymes and bulls start buying at the current prices, Dogecoin could recover and aim for the 61.8% Fibonacci level of $0.21. If the broader market sentiment recovers to greed, DOGE could extend the upswing towards $0.34. However, if history fails to rhyme and the market sentiment remains in fear, traders should anticipate a drop to $0.13. Meanwhile, a recent analysis reported that a symmetrical triangle warns that DOGE price could make a 60% breakout to the downside if support at $0.16 fails to hold.

The technical analysis shows that it is likely that Dogecoin price recovers soon as bulls defend the demand zone sitting between $0.142 and $0.160. Historical data shows that bulls have been entering the market at these prices since November, and aided a bullish breakout within weeks. The MVRV also supports this bullish outlook by showing that a majority of recent buyers are sitting on significant losses. If traders become less willing to sell at a loss, it could pave the way for a recovery in the near term.