Dogecoin, the cryptocurrency that started as a joke, may soon have the last laugh as it heads toward a potential supply squeeze which could send its prices soaring. The mechanism behind this phenomenon is the stock-to-flow ratio, a key metric used to evaluate the scarcity of a commodity, indicating the relationship between the current stock of a commodity against its flow of production. For Dogecoin, this ratio has surged to an all-time high of 69.25 between August 18th and 19th. The stock-to-flow model, extensively followed in the crypto community and traditionally applied to precious metals like gold and silver, suggests that Dogecoin is becoming increasingly scarce. According to on-chain analytics platform Santiment, the rise in Dogecoin’s stock-to-flow ratio could signal a massive demand outpacing the available supply, a classic setup for a supply squeeze. Such a scenario typically leads to price increases, as the scarcity of the asset makes it more valuable in the eyes of investors.
The anticipation of a price surge for Dogecoin isn’t unfounded, as other on-chain metrics provide corroborative evidence of mounting demand. Notably, data from IntoTheBlock revealed a significant uptick in large transactions involving Dogecoin, hitting a 7-day high with 7.37 billion DOGE on August 19th. This spike is indicative of increased movements by “whales,” or large holders, who are possibly accumulating Dogecoin in anticipation of its next upward price movement. Such whale activities often presage bullish trends for cryptocurrencies, as they suggest a growing confidence among substantial investors. Moreover, the surge of over 3,200% in net flows into large holder accounts further supports the narrative of a bullish buildup. These investors are not only acquiring more Dogecoin but are also withdrawing them from exchanges, possibly to hold them in private wallets, a behavior common among investors aiming to hold long-term.
Retail investors too seem to be getting behind Dogecoin, as evidenced by a more than 51% increase in its trading volume over the last 24 hours, with $625.3 million worth of Dogecoin changing hands, according to CoinMarketCap. This surge in trading volume across retail and whale segments of the market suggests a broad-based confidence in the potential for Dogecoin’s price to rise. Given the meme coin’s high profile and its history of volatility and rallies sparked by social media and endorsements from high-profile figures, a sudden surge in interest and price wouldn’t be out of character.
Crypto analyst Javon Marks has added to the optimistic outlook for Dogecoin’s future, predicting a staggering 513% rally that could see the meme coin’s price hit $0.6533. This bullish forecast hinges on the analysis of Dogecoin’s Relative Strength Index (RSI), a momentum oscillator that measures the speed and change of price movements. According to Marks, the RSI is nearing a breakout point, diverging from current prices in a way that suggests a major upward movement on the horizon. Given these analyses and the meme coin’s current trading price of around $0.1052, up more than 5% in 24 hours, Dogecoin investors may be in for an exciting ride.
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