Summary Dogecoin (DOGE-USD) has outlived the naysayers like myself who called labeled it a 'sell' at 8 cents. If there is any fundamental value in DOGE beyond the meme, it's when transaction fees spike on the Bitcoin (BTC-USD) Blockchain. Which appears to be starting to happen once again. Historically, daily active addresses on Dogecoin lead price higher. We're seeing active addresses start to move up. I don't currently have an active DOGE position on. But it's not something that I'm ruling out in the instance of a deeper pullback to the coin's 50 day MA. My history with Dogecoin ( DOGE-USD ) on Seeking Alpha is not one of admiration. In December 2023, I was highly bearish the coin and called DOGE my top crypto bear pick for 2023. More recently, I upgraded the coin to 'hold' and noted that despite what I view to be a somewhat pointless coin, the power of the meme was no longer something I felt made sense to fade. Data by YCharts That turned out to be a well-timed pivot as DOGE rallied more than 100% shortly after the upgrade. Currently, we find DOGE well off those highs from March of this year but ahead of the August lows of 8 cents. In this update, we'll take a look at key metrics from the network and the technical setup that can be currently viewed in the price. Network Metrics Two of the primary ways we analyzed DOGE in my late-February piece was through active address data and fee data. Fees are important because they show network usage through ledger validation revenue and daily active addresses are important because they show the closest thing we have to users. On that latter point, daily active addresses are not - and should not be viewed as - a viable 'unique users' comparison because one person can operate several different addresses. Regardless, to be bullish the broader Dogecoin network, DOGE holders would theoretically want to see active addresses and fees both increase in tandem. Dogecoin Fees vs FD Cap (Token Terminal) The chart above shows the full history of Dogecoin network fees on a monthly basis. When I last covered Dogecoin, monthly fees were on the rise. In February, fees eclipsed $462k for the month. This is still well below what could reasonably be considered a robust fee market compared to other public blockchain networks. But the main takeaway is that early 2024 fees were a flash in the pan. The network has been averaging about $70k in monthly fees between August and October. This is off the highs from the spring but actually well ahead of the 2023 averages. Switching gears to daily actives, I've added the coin price to the chart and below and we're looking at both price and daily active address count through a 30 day average: 30 Day Average Price vs DAAs (CoinMetrics) 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. The question is do we have a viable catalyst for a larger sustained move in daily active addresses on Dogecoin? Frankly, I think it comes down to the network usability of Bitcoin ( BTC-USD ). BTC Median TX Fee (30 Day average) (CoinMetrics) In the past, we've generally needed large fee spikes on Bitcoin to get big moves higher in daily active addresses on smaller proof-of-work blockchains. In the chart above, we can see the median transaction fee on Bitcoin started to move higher at the beginning of October. I'm certainly not going to try to predict that this will be the time the Bitcoin fee market grows sustainably, but I suppose anything is possible. Technical Opinion The most straight forward way to look at altcoin charts is to examine the dollar-denominated price levels against moving averages. My assessment of DOGE in this manner is actually somewhat bullish: DOGE Daily Chart (TrendSpider) The daily chart above shows a a coin that has battled trend line resistance from spring of this year, broken that trend, back-tested it, and achieved a subsequent new high since August. Furthermore, the 200 day moving average has been taken out as well. Such analysis is fine but it doesn't always make the case that longing an altcoin is a good idea if it can't realistically be expected that the coin in question will outperform Bitcoin. Below I'm showing peaks the DOGE/BTC ratio over the last five years: DOGE/BTC Ratio (TrendSpider) The number of the ratio itself is a bit dubious to even share as it has so many zeroes following the decimal. The better way to measure it is to do so in Satoshis, or "sats." Currently, it takes about 200 sats to buy 1 DOGE. On the chart above, I've drawn a trend line from the long term high of 1,287 sats in May 2021 down to today. This line has served as resistance on each subsequent pop in the price of DOGE. That changed in September when the ratio moved above trend. We now find the ratio battling to take out the 50 week MA at 208 sats. In a broader crypto rally, I could very easily see a pop to 253 sats - which previously served as support before breaking down. But again, as is the case with transaction fees on Bitcoin, we're guessing. Closing Thoughts When it comes to crypto, I've tried to look for fundamental reasons to be bullish a network, coin, or token. As is often the case, the fundamental thesis for DOGE is not all that straight forward. The coin has survived far longer than I believed it could as little more than a "meme." We could argue that the joke seems to be increasingly less funny as the years go on. Regardless, where I think DOGE does have some fundamental value is in an environment where fees on Bitcoin make the network unusable for most holders. This has proven to lead to surges in usage for other PoW networks and Dogecoin is one of them. Those Bitcoin fees appear to be spiking again. And we know that daily active address increases typically lead price with DOGE. It's a gamble and guess, but I wouldn't be surprised if we see a 25% pop in the DOGE/BTC ratio. That would take DOGE from 200 sats to 250 sats. At a BTC price of $67k, we get a 250 sat price of nearly $0.17 for DOGE. It's not a terrible trade if one chooses to put it on. I don't currently have an active DOGE position on. But it's not something that I'm ruling out in the instance of a deeper pullback to the 50 day MA.
