Dogecoin is overvalued, but Monday may change the situation

Dogecoin has declined in recent days as negative sentiment spreads across the broader cryptocurrency market. Despite the decline, the prank coin is currently considered overvalued due to growing speculation surrounding the upcoming launch of Grayscale’s Dogecoin (GDOG) Bitcoin ETF.

This hype could translate into high transaction volume on Monday, which could boost DOGE’s short-term outlook.

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Dogecoin investors offer support

Dogecoin’s NVT ratio is on the rise, indicating a disconnect between valuation and on-chain activity.

The ratio compares the market capitalization and the volume of the transaction, and a high one usually indicates a limited transaction benefit compared to the price. while Attract DOGE Strong social interest and broad support, their current transaction levels do not match this.

Often, this discrepancy can lead to an overvaluation, which in bearish conditions could lead to a decline.

However, the timing of this rally coincides with the expected launch of Dogecoin’s Grayscale Bitcoin ETF. This fund is expected to attract a significant capital flow, which could reset the NVT ratio and rebalance the price and activity in the chain.

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The major indicators also paint an encouraging picture. Dogecoin’s live activity meter has been rising for several days, indicating an increase in the behavior of long-term holders of the coin.

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Vital activity increases when coins remain inactive for longer periods instead of being spent, indicating that major holders are maintaining their positions.

This tendency is particularly important during pullbacks. Long-term holders often act as a backbone for price stability, against the volatility caused by short-term traders.

His continued conviction reduces the risk of a sudden sale and shows confidence in Dogecoin’s ability to recover Once market conditions change.

The price of DOGE may increase

Dogecoin is trading at $0.143 and holding the support level of $0.142. The joke coin is still stuck under a month-long downtrend that it has repeatedly failed to break. Current bearish conditions make recovery difficult without a major catalyst.

It can provide a release DOGE ETF That catalyst. A successful debut could lift DOGE above $0.151, paving the way towards $0.165. A move of this magnitude would reverse the downtrend and indicate a change in momentum supported by new flows.

If the enthusiasm around the ETF fails to transition into buying pressure, Dogecoin may extend its decline. A fall towards $0.130 remains possible.

But if DOGE does not make such a severe decline, it may continue to struggle below the $0.151 resistance, extending the ongoing downtrend.