The price of Dogecoin (DOGE) closed down 10% in May 2023 despite a significant increase in daily transactions driven by DRC-20 Ordinals. Although the network activity spiked, the DOGE price declined, raising concerns about the bearish momentum.

The on-chain data shows that there has been a tremendous surge in network activity across the Dogecoin ecosystem. However, it has not translated into price gains. The rising transaction fees continue to control the bearish situation surrounding DOGE.

Dogecoin Transactions Have Spiked 8,200%

Despite the astronomical jump in network activity in May 2023, the price trend of DOGE has remained downward. The data indicates that Dogecoin network activity soared 8,200% during the period of May 1 to May 31, from 19,240 transactions to 1.45 million transactions. Unfortunately, during the same period, DOGE price decreased nearly 10%.

Transaction Count is the number of transactions confirmed on a blockchain network during a specific period. Generally, Dogecoin’s price tends to increase when there is a sustained spike in transactional activity. So, the current divergence between DOGE price and Transaction Count raises several concerns.

Whales Activity on the Dogecoin Network Has Dropped

Although the total number of transactions on the Dogecoin network has increased, a deeper analysis of on-chain data reveals a significant drop in large transactions. Whale transactions decreased 56% from 1,930 to 854 transactions between May 12 and May 31.

It suggests that most transactions influencing the 8,200% spike in Dogecoin network activity are DRC-20 Ordinals transactions, contributing little economic value due to their small sizes. This confirms the bearish outlook for the price of DOGE, as whale transactions are critical to its price prospects. They provide much-needed liquidity to the market and contribute higher economic value per transaction. Hence, DOGE’s price could drop further in the coming days if the situation remains unchanged.

DOGE Price Prediction: The Bears Could Push For $0.06

The prolonged decline in whale transactions suggests that the DOGE price will drop toward $0.06. However, IntoTheBlock‘s In/Out of the Money Price (IOMAP) distribution data shows that DOGE will experience bullish support around $0.065.

At that zone, 326,000 addresses bought 6.13 billion DOGE tokens at an average price of $0.065. But if that support fails, DOGE’s price will likely slump further toward $0.06.

The bullish narrative will come if DOGE’s price breaks above $0.08. But some of the 547,500 investors who bought 47.9 billion coins at the average price of $0.08 may resist, leading to a bearish response and a decline in the DOGE price. However, if that resistance level fails to hold, DOGE’s bulls will likely push the rally to $0.09.