Dogecoin has experienced a surge of over 12% in the last 24 hours, but an emerging trend in an on-chain indicator could indicate a potential bearish end to this rally.
Recent data from the on-chain analytics firm Santiment reveals that Dogecoin investors have exhibited signs of FOMO (fear of missing out). The report discusses the trend in the Total Amount of Holders for various top cryptocurrencies, an indicator that tracks the total number of addresses on a network maintaining a non-zero balance.
As this metric rises, it suggests new investors are joining the blockchain or dormant ones are re-entering the market. The indicator also registers an increase when existing users split their holdings across multiple wallets for reasons such as privacy. Typically, all these factors contribute to some degree of net adoption of the asset.
Conversely, a decrease in this metric implies some holders are emptying their wallets, possibly signaling a loss of confidence in the cryptocurrency. A recent chart illustrates the trend in the Total Amount of Holders for Bitcoin, Dogecoin, and other leading assets. While most assets have seen an increase in this metric, Bitcoin has shown a decline, losing 211,500 addresses in the past three weeks, bringing its total to 54.38 million.
This drop suggests that some Bitcoin investors doubt the sustainability of the current rally, opting to liquidate their holdings at recent prices. Historically, cryptocurrency prices have tended to rise when investors are fearful and fall when FOMO is prevalent. Therefore, the recent drop in Bitcoin holders may paradoxically signal a bullish trend for the cryptocurrency.
On the flip side, Dogecoin has shown an opposite trajectory. The network has gained 46,400 addresses with a balance in just the past week. Santiment’s analysis interprets this as an indication of traders speculating on meme coins, spurred by last week’s local highs. Historical patterns suggest that this surge in FOMO might not bode well for Dogecoin.
Despite the recent bullish momentum that pushed Dogecoin’s price beyond the $0.168 mark in the last 24 hours, the growing FOMO might challenge the sustainability of this run. The recent sharp climb in Dogecoin’s price could be short-lived if the historical trends hold true.
