Anika Begay
Dogecoin (DOGE) is at risk of a significant price drop due to its network activity, which has been stable for some time. Despite a bullish peak In some other metrics, this on-chain metric remains critical to the growth of the leading meme coin.
Dogecoin Network Activity Down
Data from the market intelligence platform In the Block shows that the Dogecoin network’s net growth is bearish and has not seen any noteworthy increases recently. Additional data from the platform shows that the number of new addresses on the network has dropped by nearly 10% over the past seven days.
In an X (ex Twitter) sendIntoTheBlock provided more insights into the slowdown in Dogecoin network activity and how the meme coin has had to rely on existing holders so far. According to the platform, the number of new addresses has slowly declined, indicating a lack of new investors join the network.
Due to this, the number of transactions on the network has been inconsistent over the past three months. IntoTheBlock noted some notable spikes, but they were all short-lived, further highlighting how Dogecoin has recently failed to record a sustained inflow of new participants on the net.
Given the slowdown of the number of new addressesIt is also possible that these notable spikes in Dogecoin transactions were triggered by existing addresses on the network rather than new holders. This slowdown in new addresses explains why Dogecoin’s price performance has been rather unimpressive, with the leading meme coin failing to replicate the price gains of other meme coins such as Pepper (PEPPER).
Meanwhile, IntoTheBlock highlighted Dogecoin diamond owners role in keeping its price afloat amid the meme coin’s lower transaction volume. These long-term holders, who have an average holding time of over two years and three months, have continued to hold, even though people may not be actively using the network.
Data from IntoTheBlock shows that 68.11% of Dogecoin holders are still in the money despite the meme coin’s unimpressive price performance. Many of these investors purchased DOGE while it was still trading below $0.10.
Plausible explanations for the slowdown in DOGE network growth
A plausible explanation for the slowdown Dogecoin Network Activity is that new investors do not see much upside for DOGE at its current level. As a result, they are moving towards new meme coins, which they believe will provide them with greater gains. In fact, Dogecoin has not fared well against these new meme coins.
DOGE has a year-to-date (YTD) gain of just over 11%. Meanwhile, coins like Women’s Hat (WIF) AND Pepper (PEPPER) have YTD gains of over 1,000% and 500%, respectively. The meme coin market is also becoming more saturated, especially with the number of meme coins launched in Solana Ecosystem daily. Therefore, it is understandable that Dogecoin is not enjoying the kind of attention it once had.
At the time of writing, Dogecoin is trading at around $0.099, up nearly 2% in the last 24 hours, according to data from CoinMarketCap.
Featured image created with Dall.E, chart from Tradingview.com
