Dogecoin (DOGE) is facing a significant price decline due to its stagnating network activity for some time. Despite a bullish rise In some other metrics, this on-chain metric remains crucial to the growth of the leading meme coin.
Dogecoin network activity at low levels
Data from the Market Intelligence Platform IntoTheBlock shows that the net growth of the Dogecoin network is bearish and has not seen any significant increase recently. Further data from the platform shows that the number of new addresses on the network has dropped by almost 10% in the last seven days.
In an X (formerly Twitter) postIntoTheBlock provided further insight into the slowdown in Dogecoin’s network activity and how the meme coin has relied on existing holders so far. According to the platform, the number of new addresses has slowly declined, indicating a lack of new investors join the network.
Because of this, the number of transactions on the network has been mixed over the past three months. IntoTheBlock noted some notable spikes, but all of them were short-lived, further highlighting that Dogecoin has not seen a sustained influx of New participants into the network.
Given the slowdown in Number of new addressesit is also possible that these notable spikes in Dogecoin transactions were triggered by existing addresses on the network rather than new holders. This slowdown in new addresses explains why Dogecoin’s price performance has been rather unspectacular, as the leading meme coin has been unable to keep up with the price increases of other meme coins like Pepe (PEPE).
Meanwhile, IntoTheBlock highlighted Dogecoins Diamond holder Role in maintaining the price despite the meme coin’s lower transaction volume. These long-term holders, who have an average holding period of over two years and three months, have continued to hold even though people may not be actively using the network.
Data from IntoTheBlock shows that 68.11% of Dogecoin holders are still in the money despite the meme coin’s underwhelming price performance. Many of these investors bought DOGE when it was still trading below $0.10.
Plausible explanations for the slowing network growth of DOGE
A plausible explanation for the slowdown in Dogecoin network activity is that new investors don’t see much upside potential for DOGE at current levels. Therefore, they tend to move towards newer meme coins that they believe will bring them more profits. In fact, Dogecoin has not performed well compared to these newer meme coins.
DOGE has seen an increase of just over 11% since the beginning of the year. Meanwhile, coins like Dogwifhat (WIF) And Pepe (PEPE) have YTD gains of over 1,000% and 500% respectively. The meme coin market is also becoming increasingly saturated, especially given the number of meme coins that are Solana ecosystem daily. Therefore, it is understandable that Dogecoin no longer receives the attention it once did.
At the time of writing, Dogecoin is trading at around $0.099, up nearly 2% in the last 24 hours. Data by CoinMarketCap.
Featured image created with Dall.E, chart from Tradingview.com
