Dogecoin Risk Indicator Has Given A Red Signal Recently

Dogecoin has enjoyed a sharp 16% rally during the past week. Here’s how this analyst’s “Risk Indicator” is looking for DOGE after this run.

CryptoQuant community manager Maartunn has shared a “Risk Indicator” for Dogecoin (CRYPTO: DOGE) in a new post on Medium.

The indicator calculates the percentage change over the last 168 hours (one week). When the percentage change exceeds a specific threshold, it indicates a potential risk zone.

The risk here is toward Bitcoin (CRYPTO: BTC) and, since the rest of the sector usually follows in its lead, it would also be toward cryptocurrencies as a whole.

Here is the chart for the indicator posted by Maartunn.

“This indicator is signaling right now as the DOGE price has enjoyed a sharp 16% rally during the past week. Each time the indicator has lit up in the past few months, the BTC price has hit some top.”

Since the latest signal, the BTC rally has been derailed. Could this mean that fast growth in the memecoin's price is once again signaling more downside to come for the sector?

The logic behind this pattern is that when memecoins break away from Bitcoin and the company, it's usually a sign that greed is taking over the market.

Historically, cryptocurrencies have tended to move in the direction that the crowd expects, so excessive greed often leads to a bearish outcome.

Investors have recently been piling into memecoins like Dogecoin in a bid to make a quick buck, but if this previous pattern is to be believed, then DOGE and its peers may have to slow down if the market is to continue its rally.

In other news, market intelligence platform IntoTheBlock has shared an update on how the average holding time compares between the major cryptocurrency networks in an IntoTheBlock post.

Here is how the platform's analysis compares the average holding time across several cryptocurrency networks.

As displayed in the above table, Bitcoin is leading in this metric, with cryptocurrency investors holding for an average period of 4.4 years before transferring their coins.

Interestingly, Ethereum (CRYPTO: ETH), Dogecoin, and Shiba Inu (CRYPTO: SHIB) are all tied for second, with the figure at 2.4 years for each.

Thus, while the memecoins do get a lot of speculative activity, they have still managed to establish a userbase that's as sticky as that of Ethereum.

DOGE Price Action: At the time of writing on Monday, Dogecoin was trading at an average price of $0.142, down by 0.66% over the past 24 hours and up by 6.31% over the past seven days.