An analyst has pointed out where a key resistance could lie for Dogecoin, based on data on the distribution of supply on the chain.
Dogecoin has a large supply cluster with a value of $0.20
In a new after at X, analyst Ali Martinez talked about where the resistance lies for Dogecoin based on Glassnode’s Cost Basis Distribution (CBD). The CBD is an indicator that tells us about the amount of DOGE supply last acquired at the different price levels that the memecoin has visited in its history.
Below is the chart shared by Martinez showing the recent CBD heatmap for Dogecoin.
As visible in the chart, the Dogecoin CBD has marked the zone around $0.20 as a zone where investors made heavy buying. More specifically, over 11.7 billion tokens have their cost base at this level.
Given that DOGE is currently trading significantly below brand value, all of these offerings would obviously be in the red. If the value rises to this level, it could cause a strong reaction from the investors as these tokens will become breakeven again.
In general, loss holders may desperately want the price to get back to their cost basis. Once the asset reaches buying levels, some of these investors choose to sell, fearing that the recovery is only temporary. This can push large cost basis levels above the asset’s potential price zones of resistance.
Between the current price and $0.20, there are no other regions in the CBD with such a large supply. Based on this, Martinez has noted that “$0.20 is the key resistance for Dogecoin.” It now remains to be seen whether DOGE will retest this level soon.
In other news, the memecoin has recently seen a spike in network activity, as the analyst noted in another X. after.
In the chart, the indicator shown is the number of active addresses, which, as the name suggests, measures the daily number of addresses participating in some transaction activity on the Dogecoin network.
It seems that this indicator has recently registered an increase, with a peak of 71,589 addresses making transfers on the blockchain. This is the largest spike the metric has seen since September.
The trend suggests that attention has returned to the Dogecoin network after a slump, but only time will tell whether this activity involves accumulation or distribution.
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At the time of writing, Dogecoin is trading around $0.138, down more than 7% in the past week.