Why did Dogecoin price rally over 25% in the past 7 days?

Key takeaways:

• Dogecoin has been performing rather well in the past week, participating wholeheartedly in the overall crypto market recovery too.
• Dogecoin price has gained over 25% in the past 7 days, touching highs of up to 33% at the highs.
• Dogecoin has been in the news ever since the takeover of Twitter by the ‘Dogefather’ Elon Musk amid reports of providing DOGE payment support for features on Twitter.

Dogecoin – the memecoin with the largest market capitalization – has managed to recover strongly in the past 7 days. DOGE price has rallied over 25% as of writing – and even touched highs of up to 33% very recently before correctly slightly. The underlying strength in DOGE has been going on for a while ever since Elon Musk’s $44 billion takeover of the micro-blogging platform, Twitter – and taking it completely private.

Now while the speculations around the integration of DOGE in Twitter services is still in the rumor phase – the excitement is palpable and it is evident from its price charts. Recent tweets from the Tesla founder seems to indicate that those speculations could be happening for real.

Read more: Dogecoin Price Prediction 2025

😉 pic.twitter.com/eaIYaDRBnu

— Elon Musk (@elonmusk) November 1, 2022

DOGECOIN TECHNICAL OVERVIEW

DOGE/USD | Source: Tradingview

As we can see from the chart above, Dogecoin price has been showing strong rallies ever since the end of last month. Especially in the last week of October, we saw a near 150% rally in the memecoin, which soon quickly corrected amid the dramatic collapse of the FTX crypto exchange. But as the FUD around the collapse began to subside as the days went by, we saw a positive bottoming out of DOGE price around $0.072 before attempting another rally in the past week, and has managed to gain about 25-30% in the interim.

Additional read: FTX Collapse Explained

From the technical point of view, DOGE price is currently in a slightly bearish zone. This is because, while DOGE price took support at the $0.07 level (the first channel on the bottom) – and broke out above the immediate resistance zone (trendline marked in black) $0.89, DOGE price is now very close to the psychological mark of $0.1. It had managed to break out of it but has corrected back below it – thus facing selling pressures there. Also, unless Dogecoin price is able to break out above the previous local high of $0.15 – the trend can continue to remain flat to slightly bearish on the technical front.

However, we can still see a golden crossover on the chart, with the 50 day moving average crossing over the 200 day moving average – which would serve to be a strong bullish support for the memecoin too. So overall things look decently optimistic for this coin on this front.

Let’s take a look at the on-chain metrics and fundamentals aspect and see if those support the optimism we see on the charts. As we have analysed in one of our earlier articles, during DOGE price rally over 100%  – It has been and still is ranging at one of the highest points of all time. Along with that supply on the top 1% of addresses is also at one of the highest points of all time and holding strong. While all these things indicate positivity – there are a few concerning metrics pertaining to this altcoin too.

Dogecoin development activity near YTD lows!

Dogecoin Development Activity | Source: Santiment

Dogecoin’s development activity is currently at one of the lowest points of the year – after having seeing multiple spikes in the interim. While momentary spikes indicate sudden interest, a low rate of development on the crypto project indicate that there’s not a lot of planning and thinking that is happening for the coin on a regular basis. There are sudden sporadic rise in interest which quickly lose steam too.

Dogecoin daily active addresses on the lower side

Dogecoin Daily Active Addresses | Source: Santiment

Quite similar to the development activity metric, Dogecoin’s daily active addresses have been on the lower side too. There have been spikes here and there, in line with major moves in the market, but overall the daily active address count has been receding on an average, which is clearly visible from the chart above. However, considering the raging bear market that we are seeing right now, this particular metric isn’t too bad either. If and when we see the resumption of a proper broad base recovery – typically active addresses count will also recover.

Dogecoin maintains healthy social dominance levels!

Dogecoin Social Dominance | Source: Santiment

Despite the slightly worrying outlook in the above mentioned metrics, the social dominance level for Dogecoin is something that has been holding on strong all through the year, despite the bear market. This is a very good sign, especially since we are talking about a memecoin which is largely led by the community and not by project developers or engineers alone who are trying to solve a problem. So, this metric will definitely add some positive flavor to the story going forward.

Conclusion

In conclusion from all the observations made above, we can say that Dogecoin is in a relatively safe place with limited downside and also, limited upside for the time being. This is because technicals and a few metrics indicate that Dogecoin price might have bottomed out, and hence the downside is pretty limited, unless there is another FTX-level incident in the market. On the other hand, positive indicators on the charts and metrics from the development activity to daily active addresses indicate that any rally would be met with some resistance.

Read more: Bitcoin Price Prediction

Prices as on 28 November, 2022.