Based on the chart shared by @ali_charts, an interesting trend has emerged in the Dogecoin (DOGE) market. Significant price action is being observed alongside changes in the MVRV ratio. This analysis indicates a potential bearish shift for DOGE soon.
The chart compares Dogecoin’s price movement to its MVRV ratio, which has recently crossed below its 200-day moving average. This pattern has been historically linked to price declines of -26% and -44% on two prior occasions.
MVRV Ratio Death Cross and Its Implications
The MVRV ratio is a key metric that compares an asset’s current price to the average price paid by its holders. When the MVRV ratio crosses below its 200-day moving average, it often signals that the asset may be overvalued.
This bearish indicator was recently observed for Dogecoin, with @ali_charts highlighting that this pattern resulted in price drops of -26% in late September 2023 and -44% in late October 2023. Given this history, the current MVRV ratio death cross could suggest a similar downward trajectory for DOGE.
Price Behavior and Its Correlation with MVRV Ratio Shifts
Looking closely at the chart, the periods when the MVRV ratio has dropped below its 200-day moving average have consistently been followed by notable price drops. The first instance, marked by a -26% drop, occurred between September 23 and October 20, 2023. The second event, a more severe -44% decrease- occurred from September 9 to September 27, 2023. These patterns underscore the negative impact of the MVRV ratio crossing below its 200-day moving average on Dogecoin’s price.
Right now, Dogecoin’s MVRV ratio has dipped once again below the important 200-day moving average. It is kind of too early to figure out just how much the price will drop, but looking to the past, it indicates a further bearish movement for DOGE. Currently, the price of DOGE is around 0.268, while the MVRV ratio stands at around 91.00%, suggesting that Dogecoin will hit an all-time low if the trend follows a historical pattern.
Future Outlook: Can DOGE Defy History?
With the repetitive behavior observed in the previous instances, there is a strong chance for Dogecoin to follow with a price correction. As @ali_charts comments, in the last two instances of the MVRV ratio crossing below its 200-day moving average, it has witnessed 26% and 44% drops.
If the same repeat occurs, traders and investors can expect this price drop. However, markets are unpredictable as ever, and DOGE could decide to turn this pattern on its head and stay at the same levels or bounce back. Only time will tell this tale, but the indicators spell bad news for Dogecoin.
