Why did Dogecoin price rally over 100% in the past week?

KEY TAKEAWAYS:

• Dogecoin price is up over 100% in the past week, in fact it is up almost 150% as of writing over the past eight days.
• Dogecoin’s incredible rally can be partially attributed to Elon Musk’s aka “Dogefather” takeover of Twitter in a $44 billion deal.
• Speculation is rife that Musk would take steps to integrate DOGE into Twitter’s ecosystem for payments among other things.

The largest memecoin by market capitalisation, Dogecoin (DOGE) has managed to rake up serious points on the charts in the anticipation leading up to Elon Musk’s takeover of the social media and microblogging giant, Twitter – in an all-cash $44 billion deal. Musk took the microblogging platform completely private, taking it off the bourses and now intends to make it a “global townhall”.

Now while all that is yet to happen, Dogecoin’s excitement is uncontainable. Past statements from the Tesla founder to current active role at Twitter, it seems that those speculations could be happening for real.

Read more: Dogecoin Price Prediction 2025

😉 pic.twitter.com/eaIYaDRBnu

— Elon Musk (@elonmusk) November 1, 2022

While all these speculations will come and go, let’s take a look at some of the more important things that make an asset viable.

DOGECOIN TECHNICAL OVERVIEW

DOGE/USD | Source: Tradingview

As is evident from the chart above, Dogecoin price rally has been a very significant one. Especially considering the fact that it is the largest memecoin and the fifth largest crypto overall by market capitalisation (excluding stablecoins). That is a spectacular feat, all things considered. DOGE price had been stagnating for a very long time, especially since the crash back in May 2022 post the Terra LUNA implosion that eroded over $60 billion from the market.

From a technical point of view, Dogecoin price has breached past multiple resistance levels. In one fell swoop, DOGE price managed to break out of its immediate accumulation zone and also past both the 50 and 200 day moving averages (marked in cyan and purple respectively). It also broke past the recent resistance level of $0.9 (marked in black) and has entered into another accumulation territory (marked in grey).

However, whaat must also be taken note of is that entering the market now under FOMO would be a very bad idea. The Relative Strength Index for DOGE is at unsustainably high levels, currently at about 90 as of writing and some form of correction is inevitable anytime soon. But despite that, if the positive sentiment sustains, the correction could be a minor one to offset the profit booking at higher levels and could resume a rally soon after.

Additional read: Dogecoin hashrate touches all-time-high

Just about two weeks ago, Dogecoin’s hashrate had touched a new all-time-high, as mentioned in the article linked above. And it seems that trend is holding strong. The hashrate for the memecoin has come down marginally from those highs but nothing that could be a cause for concern.

Read more: Dogecoin Technical Analysis

Dogecoin Hashrate | Source: coinmetrics.io

Supply in top 1% of addresses consistently on the rise!

Dogecoin Supply in Top 1% of Addresses | Source: coinmetrics.io

Another on-chain metric to sweeten the deal is definitely this one. Dogecoin’s supply in top 1% of addresses has been consistently rising, despite the falling DOGE prices. Currently, the total number of DOGE held by these top 1% of addresses amount to about 130.5 billion DOGE according to data from Coinmetrics.io.

NVT Ratio holding steady

Dogecoin NVT Ratio | Source: coinmetrics.io

Dogecoin’s NVT Ratio has been on the higher side since the beginning of the current year but since then has been oscillating within a range. While a rising NVT ratio indicates that investors are pricing the crypto at a premium, a stable and strong NVT ratio indicates that the current growth trend of both the market cap and its transfer volume are in equilibrium, suggesting the current market trend is sustainable. Putting the current 150% rally in DOGE price into context and we have a crypto that looks pretty bullish in the near term.

Conclusion

So, inferring from the observations made above, all the way from a healthy hashrate level to rising supply in top 1% of addresses and the stability in the NVT ratio – all indicate one thing, that is Dogecoin price is geared up for a good recovery going forward too. And with positive technicals all over the place, we can definitely agree that DOGE has come out to be one of the top recovery candidates amongst the top cryptos by market cap.

Prices as on 1st November, 2022.