Is Dogecoin Forming a Legitimate Bottom in a Downtrend?

The question of whether Dogecoin (DOGE) is forming a legitimate bottom in its prolonged downtrend has become a focal point for traders and investors in late 2025. With the asset's price hovering near critical technical and on-chain thresholds, the interplay between reversal signals and sentiment divergence offers a nuanced picture of potential turning points. This analysis synthesizes recent technical indicators and on-chain metrics to assess the likelihood of a structural shift in DOGE's trajectory.

Technical Reversal Signals: A Fragile Foundation

Dogecoin's price action in late 2025 has exhibited classic reversal patterns, though their validity remains contested. On December 2, 2025, DOGE briefly dipped below the $0.1350 support level before rebounding, forming a potential double-bottom structure as it retested the same zone. This pattern, if confirmed, could signal a short-term bullish reversal after weeks of consolidation. Momentum indicators like the RSI and MACD have shown mixed signals: the RSI briefly entered oversold territory on the 4-hour chart, while the MACD line crossed above the signal line, suggesting institutional buying interest. However, the lack of sustained volume during these rebounds raises questions about the strength of the reversal.

A critical technical reference is the 0.786 Fibonacci retracement level, which DOGE has approached multiple times in its history. Analysts note that this level often coincides with capitulation or structural reversals during volatile cycles. While the price briefly dipped to $0.14 before recovering, the absence of a clear breakout above the $0.1362–$0.1386 resistance range underscores the fragility of the current setup. The convergence of the 50-day and 200-day moving averages at $0.20 further complicates the outlook, as it indicates a period of consolidation rather than a definitive trend shift.

On-Chain Divergence: Accumulation vs. Profit-Taking

On-chain metrics reveal a tug-of-war between accumulation and profit-taking forces. The MVRV Z-score has climbed to 1.35, indicating that a growing portion of DOGE holders are in profit—a condition that often invites short-term selling pressure. Conversely, the NVT ratio has rebounded to 121, suggesting that market value is outpacing transaction volume, a potential sign of overvaluation. These metrics highlight a divergence between price action and underlying on-chain sentiment.

Whale activity further complicates the narrative. While large holders accumulated 1.08 billion DOGE in recent weeks, signaling confidence, Q4 2025 data shows sharp selling by whales holding 10–100 million DOGE, reducing their balance by $730 million in value. This divergence reflects a weakening consensus among major investors. Meanwhile, HODL Waves data reveals a decline in both short-term and long-term holder shares, from 17.47% to 7.24% and 40.32% to 21.87%, respectively, since early 2025. Such shifts often precede capitulation phases in meme coins.

Conflicting Signals and Market Sentiment

The broader market context adds another layer of complexity. While technical patterns like the descending wedge and inflow into centralized venues suggest buyers are absorbing sell pressure, derivatives data paints a bearish picture. Short liquidation leverage on platforms like Gate.io stands at $776.75 million, dwarfing long positions of $151.77 million, indicating traders are heavily positioned against DOGE. This contrasts with bullish on-chain metrics like the cumulative volume delta (CVD), which shows buyers maintaining flow control despite elevated sell-side liquidity.

Social sentiment and macroeconomic factors also play a role. Dogecoin's social dominance has spiked to 3.57%, the highest since early Q1 2025, reflecting renewed retail interest. However, unstable engagement levels and declining open interest since October's washout suggest that speculative fervor is waning. Regulatory clarity in certain jurisdictions and macroeconomic tailwinds for crypto markets could yet provide a catalyst, but these remain speculative.

Conclusion: A Tenuous Equilibrium

Dogecoin's price action and on-chain metrics present a paradox: technical indicators hint at a potential double-bottom and Fibonacci-driven reversal, while on-chain divergence signals overvaluation and weakening investor confidence. The key to resolving this tension lies in whether DOGE can reclaim and break above the $0.1362–$0.1386 resistance range, a move that would validate the bullish case. A weekly close above $0.23, coupled with increased volume, would further confirm a shift in momentum.

For now, Dogecoin remains in a fragile equilibrium, with its fate hinging on the interplay of accumulation, profit-taking, and macroeconomic catalysts. Investors should monitor the 0.786 Fibonacci level and the MVRV Z-score closely, as these metrics could either confirm a structural bottom or signal a deeper correction. In a market as volatile as crypto, patience and discipline will be paramount.