Summary Dogecoin surged over 240% in a few weeks, but recent metrics suggest the gains may have peaked. Network fees for DOGE spiked 330% year-over-year in November but have declined for nearly five weeks, indicating reduced usage. Daily active addresses hit over 1 million in mid-November but have since returned to normal levels, showing a drop in activity. Despite declines in fees and active addresses, DOGE's price remains near recent highs, suggesting a disconnect between usage and price. In the two months since I last covered Dogecoin ( DOGE-USD ) for Seeking Alpha, crypto's oldest 'memecoin' has enjoyed quite the rocket ship ride. Data by YCharts After ripping higher by over 240% in a matter of just a few weeks, I suspect the gains have been had in DOGE. In this update, we'll revisit some of the metrics and indicators I shared in my previous article, look at the technical setup for DOGE, and assess the broader 'memecoin' segment of the market. Revisiting Network Metrics When I wrote This Dog Wants To Run in late-October, there were several very specific on-chain metrics that I felt offered a favorable short-term setup to DOGE bulls. There is no question that we've seen network fees take off for DOGE in the last two months: Dogecoin (Token Terminal) Fees surpassed $552k in November. Which was about a 330% year-over-year gain over November 2023. To be clear, while this is a significant surge for Dogecoin, it's far less than what larger chains like Bitcoin ( BTC-USD ) and Ethereum ( ETH-USD ) typically do for monthly fees. More importantly, following the initial spike in fees in November, the trend in daily fees has been down for close to five weeks. This is indicative of declining usage. Recall what my leading indicator was for the expected rally in DOGE back in October: What I find interesting about this chart is over the last 5 years we've generally seen starts and peaks in active addresses lead price. In early 2021 active address growth lead coin price between March and May. It happened again between November 2023 and March 2024. The same appears to be happening again with Dogecoin active addresses grinding higher by about 20% starting at the beginning of September. To say that daily active addresses exploded following that article would be an understatement: Dogecoin (CoinMetrics) In mid-November, there was a five-day period when the chain had over 1 million DAAs each day. That has never happened on Dogecoin before. The problem is, activity has since fallen right back to normal levels, and yet price remains elevated. The big difference between this active address spike and the one that preceded it in the Spring is DAAs didn't lead price, price led usage. My general view is that it's more indicative of fundamental weakness than strength. But to recap, we now have declines in fees, declines in active addresses, and prices still holding closer to recent highs despite the drops in chain usage. I suspect the price will follow everything else lower. Technicals In October, I shared my technical thoughts on the DOGE price and shared what, I felt, was a clear breakout in a downward diagonal resistance trend line. I see a different signal in the chart now: DOGE (TrendSpider) This is a very different setup following what has been a magnificent rally since the end of October. But traders/investors should not overlook some of the warning signs on this chart. First, DOGE has now re-entered what is essentially a massive air-pocket between 20 cents and 36 cents. There was very little actual price discovery on the way up, and I suspect the same will be true on the way down. But that's admittedly just a guess. The bigger issues are the massive bearish divergences between November 13th and December 9th. The 200-day moving average - currently sitting at 17 cents, shows substantial downside risk if the coin were simply to revisit previous levels. Finally, DOGE isn't even technically oversold yet at a 14-day RSI of 32. This could grind much lower before any 'dead cat' bounce. DOGE/BTC Weekly (TrendSpider) It wasn't just the DOGE/USD chart where we had breakouts back in October. The DOGE/BTC chart also looked quite bullish for Dogecoin when I wrote my last DOGE piece. That too looks exhausted after the sizable move higher. In October, I felt 253 sats per DOGE was a fitting price target. DOGE smashed through that level and went all the way to 492 sats before falling back below 400. At minimum, I believe the market will take DOGE back to 250 sats though I certainly wouldn't rule out another 'overshoot' of that target to the downside since we had one to the upside. Memes and DOGE For me, one of the biggest reasons why DOGE has very limited upside from here (if any) is because there is now too much competition for liquidity in the memecoin segment. With the proliferation of memecoins in the cryptocurrency market, eight of the top hundred cryptocurrencies by market cap are memecoins - and five of those eight memecoins are dog-related. Memecoins (CoinMarketCap) Memecoins actually account for $91.5 billion of the $3.3 trillion total cryptocurrency market cap. Memecoins have been so popular, in part, due to platforms like pump.fun, that Artemis tracks memecoins as an industry segment in its benchmark index: YTD Crypto Benchmark Index (Artemis) At one point in December, the memecoin segment was up almost 400% year to date. Now at just 200% year to date, memecoins have given back almost half their 2024 gains in just a couple of weeks, and yet they're still leading the industry as a category in terms of year to date gains. There is a significant amount of 'extrinsic value' that is potentially going to get unwound in this market, and DOGE will not be immune from that. Closing Thoughts As has occasionally been the case through the existence of the coin, DOGE was a terrific trade back in October. However, the setup is very different now. The fundamental story has deteriorated, with fees and active addresses in clear decline since the November pops. The technical story looks rough in my estimation, judging by the bearish divergences on the DOGE/USD daily chart and the potential weakness against BTC that can be expected on the DOGE/BTC weekly chart. But the bottom line in my view is the harder they come, the harder they fall. Memecoins have owned the year as a segment, judging by percentage appreciation. I suspect 2025 is going to be very different than 2024. If you made bank on this DOGE run, I'd take the win.
