On August 29, the Dogecoin (DOGE) price bounced nearly 10% after Rhode Island regulators approved a currency transmitter license for Elon Musk’s X (Twitter). A vital on-chain indicator reveals how DOGE traders will likely react to the media attention.
From a series of cryptic tweets to an honorable mention on a Saturday Night Live (SNL) special, Elon Musk has been a major proponent of Dogecoin (DOGE) over the last few years. On Monday, media reports revealed that the social media giant X (Twitter), owned by the billionaire, has acquired a “currency transmitter license.”
Unsurprisingly, crypto enthusiasts switched attention to DOGE, echoing long-running rhetorics that memecoin could become X’s native peer-to-peer payment protocol. A key on-chain indicator provides insights into how DOGE traders will likely react to this development.
Dogecoin Attracted Significant Media Attention Amid Crypto Market Rally
While Grayscale’s Spot Bitcoin ETF appeal dominated headlines this week, Dogecoin was not far behind. Barely 24 hours after the X’s trading license was reported, Dogecoin witnessed a noticeable spike in its share of crypto media mentions.
The Santiment chart below illustrates how DOGE Social Dominance increased from 1.05% to 1.9% between August 27 and August 29.
Dogecoin (DOGE) Price Could Drop | Social Dominance, Aug 2023, Source: Santiment
Social Dominance measures the percentage of mentions that a cryptocurrency attracts in reference to the top 50 most talked about projects. The spike observed above shows that Dogecoin attracted an increased share of media traction following the news of Twitter’s crypto trading license.
While this has contributed to the 10% DOGE price bounce on August 29, another vital on-chain indicator flashes red signals.
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DOGE Traders Capitalize on the Media Traction to Book Profits
Strategic Dogecoin traders could capitalize on the media euphoria to cash out. According to Exchange on-chain market depth, DOGE traders have placed 563 million coins up for sale. This significantly outweighs the current volume of purchase orders totaling 335 million DOGE.
Dogecoin (DOGE) Price Could Drop | Exchange Order Books, Aug 2023 | Source: IntoTheBlock
The Exchange On-chain Market Depth chart shows the volume of active orders for Dogecoin placed across recognized cryptocurrency exchanges. As depicted above, the market supply for DOGE has now outpaced demand by more than 228 million coins.
This suggests that traders taking advantage of the recent crypto market rally have already triggered a price correction by taking profits.
More noticeably, this can be seen as the price experienced a 6% decline following its nearly 10% surge in price. It has, however, regained over 3% of that initial sell-off in price, as seen below:
Dogecoin (DOGE/USDT) Chart. Source: Tradingview
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DOGE Price Prediction: Possible Retracement Toward $0.060
Unless the Dogecoin traders change their disposition, the DOGE price could drop below $0.060 in the coming days.
The In/Out of Money Around Price data, which depicts the entry price distribution of the current Dogecoin holders, also supports this prediction. It, however, underlines that 77,000 addresses had bought 4 billion DOGE coins around the average price of $0.063. If they HODL, they could offer significant support.
But if the bears continue to mount sell-orders as predicted, Dogecoin price could eventually drop below the $0.060 market.
Dogecoin (DOGE) Price Prediction | IOMAP data, Aug 2023 | Source: IntoTheBlock
Conversely, if the positive media sentiment grows, the bulls could force an upswing above $0.080. However, 164,000 addresses had bought 20 billion DOGE at the average price of $0.073. If they sell, the Dogecoin price could enter another retracement. But if the resistance level gives way, the DOGE price could reclaim $0.080.
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